Chery and GAC agree to form strategic alliance

Gasgoo.com (Shanghai November 6) - Chery Automobile and Guangzhou Automobile Group have officially announced the formation of a strategic alliance, with the two companies signing an official agreement in Beijing earlier this week. The news, which was reported by Beijing Business Today, will see both parties cooperate in technology development and various other fields.

The agreement will reportedly be limited to cooperation regarding technology research and development, auto parts sourcing, product development and other related fields. The agreement will not involve any financial cooperation.

Reports of a partnership between GAC and Chery began appearing as early as 2010. However, due to various factors, an agreement failed to materialize. With domestic manufacturers continuing to lose market share to joint venture enterprises, it seems both GAC and Chery have been forced to reconsider forming an alliance.

GAC and Chery are two of China's largest state owned automobile enterprises. Furthermore, Chery is one of China's largest automobile exporters. Several in the industry speculate that GAC may be able to make use of Chery's overseas businesses to export its Trumpchi own brand sedan. However, the two parties were unwilling to reveal any specific details regarding the partnership.

The Chinese government has previously encouraged automobile enterprises in the country to merge in order to help boost development in the industry and spur economic growth. Although this agreement is not equivalent to a merger, it marks a new landmark for the Chinese automobile industry.