Changhe Automobile ask “independent” from Changan, JMC may playstrump

Xinshe Lu, the governor of Jiangxi Province, encouraged enterpriseslike Changhe Automobile to merger and reorganization at the 7th meeting of13th session of CCP Jiangxi Province. It arousesInfinite guess on the market that who Changhewill besold to at this time?

The “strike for indepedency” of Changhe at the last Spring Festive caused a mighty uproar in industry. Changhe is still looking for independency after 1 year.

The story of Changhe Automobile and Changan China Group started from the “Chinese style merger” of automobile industry at 2009. Changan China gobbled Changhe Automobile, Hafei Motor, Dongan, Changhe Suzuki and Dongan Mitsubishi of AVICat the price of 23% stake of itself. And then Changan China became the fourth large automobile group in China.

However, the merger was orchestrated by SAC, Xiaoyu Zhang who is the VP of China Machinery Industry Federation and knew the inside story said, “Changan has its own integrated arrangement, but did not willing to merger Changhe and Hafei who were loss for years. Meanwhile, Change and Hafei had their own strategies as well. Therefore, the merger did not progress smoothly.

Changan planned to transfer Changhe’s productionlicense to Changan Mazdaon Jan. 2012 but met resistance of Changhe. The result was Changan was forced to promise to maintain status quo, but almost all Changan managers quit Changhe management.

What’s more, conformity of Hafei does not successful too. According to horse’s mouth, Hafei sold 10 thousand own-brand cars only at the first half year of 2013, which only take 10% of the sales ofmerger year 2009.

Meanwhile, Changan has a showdown with local government. Aimin Xu, Party Secretary of Jingde City, signed a strategic cooperation framework agreement with the chairman of Changan China—Liuping Xu on 12 May 2010. According to the agreement, Changan shall invest a150 thousand acre automobile basement at Hongyuan Town of Jingde City. However, Changan gave up the basement after its strategy changed.

Besides, Changan did not notice the local government when it planned to transfer productionlicense of Changhe to Changan Mazda. However, Changhe automobile is one of pillar enterprises of Jingde City, and also a large taxpayer of local government. Aimin Xu, director of NDRC of Jiangxi Province, and Baosheng Deng, Party Secretary of Jingde City, went to Beijing, just to delivery .

If Changhe get out from Changan, itssupervisor might be the National Defense Industries of Jiangxi. Reporters learned thatGuangming Wan, Vice Directorof National Defence Industries of Jiangxi, attended generalmanager- Zhengrong Tong’s inauguration, and made a speech.

Now the next steps of Changhe arecooperating with an enterprise within province. Beside, strength the cooperation with Suzuki; Third, introduce strategy investors who will solve capital issues.

The most possible cooperator is JMC, but JMC is a joint-stake company that parties should make a common agreement, particularly attitude of Ford.

As strategy investors, Jiangxi Cooper could be the first investor, but not sure how many investorsshould be introduced at this moment.