BAIC invests $736 mln to restructure Baolong's production base

Shanghai August 19 (Gasgoo.com) Beijing Auto signed a cooperation agreement yesterday with government of Zengcheng city, Guangzhou province, Guangzhou Jingye Investment Company and Guangzhou Zengcheng Asset Management and Investment Co., Ltd., preparing to restructure the production base of Baolong Light Vehicle Co that it has just acquired yesterday, media reported Thursday.

Baolong Light Vehicle Co, a subsidiary of Guangzhou Baolong Group, has fallen into losses after failing to open up the passenger car market at the end of 2004. After reaching the restructing agreement with Beijing Auto, Daimler AG and Hyundai Motor's Chinese partner, Baolong Light Vehicle Co finally has a chance to start all over again.

Under the restructuring agreement, Beijing Auto will invest 5 billion yuan ($736 million) to expand Guangzhou Baolong's existing light vehicle manufacturing base in southern China and to add a new plant there.

It is reported that Beijing Auto, which last year acquired Saab vehicle technology from the Swedish brand's former owner, General Motors Co., will set up two vehicle assembly plants in southern China.

The first plant will be built based on Baolong Light Vehicle Co and is expected to have an annual production capacity of 100,000 vehicles while the second plant will be able to produce 200,000 vehicles per year. The two plants to be built are expected to generate 20 billion yuan in sales every year and about 80 billion yuan in output value of both vehicles and auto parts.

The deal, if it goes ahead as planned, will give BAIC a stronger presence in southern China, where Guangzhou Automobile Industry Group and its partners, Toyota Motor Corp. and Honda Motor Co., dominate.