China's BAIC aims to list car unit in Hong Kong next year

Reuters (Tianjin) - Chinese state-controlled automaker BAIC Group aims to list its passenger car subsidiary in Hong Kong next year, raising around 10 billion yuan ($1.6 billion), its chairman said on Tuesday.

Proceeds from the initial public offering, which would see BAIC follow rivals Dongfeng Motor Group Co and Geely Automobile Holdings Ltd onto the Hong Kong market, will be used to develop its own passenger car business.

That unit plans to sell an own-brand upmarket vehicle for the first time within the next few months, Xu Heyi said.

The high-end vehicle it plans to launch will be based on SAAB technology, which BAIC bought for $200 million in 2009.

"We estimate that it will be on sale in the market around the end of this year or the beginning of next year," Xu told Reuters on the sidelines of the World Economic Forum meeting in the Chinese port city of Tianjin.

It has set up a 12 billion yuan production base in Beijing for the new own-brand model.

Under partnerships with Daimler AG and Hyundai Motor, BAIC makes Mercedes and Hyundai-branded cars for sale in China and also has its own-brand small car, the E150. It is the fifth largest Chinese automaker, with January-August sales reaching 1.25 million, according to data from the China Association of Automobile Manufacturers (CAAM).

In 2009, China eclipsed the United States as the world's largest auto market by volume, but Chinese automakers still rely heavily on locally made foreign brands.

Over 98 percent of Dongfeng's sales came from its three partners Nissan Motor Co Ltd, Honda Motor Co Ltd and Peugeot SA.

Vehicle sales in China in August rose 8.3 percent from a year earlier, CAAM said on Monday, a steady pace though far from the blistering speed of recent years, as a recent fuel price rise and a slowing economy discouraged consumers from buying.