SAIC to acquire Shanghai Diesel Engine Company

Shanghai. September 4 (Gasgoo.com) - Shanghai Diesel Engine Company, a diesel engine maker listed in Shanghai, announced last week that its parent company, Shanghai Electric Group has agreed to sell all Shanghai Diesel Engine assets to Shanghai Automotive Industry Corporation (SAIC) or its subsidiary companies.

Currently Shanghai Diesel Engine's parent company, Shanghai Electric Group holds 50.32 percent of its stake.

Hu Maoyuan, chairman of SAIC Board of Director, said the acquisition was part of SAIC's efforts to develop commercial vehicles. Due to declining prices and raising costs, passenger vehicles are not as profitable as in the past; by contrast, commercial vehicles are becoming more profitable, Hu said

Shanghai Diesel Engine Co produces large diesel engines and environment friendly engines powered by natural gas, and that is what SAIC needs to have, an auto industry analyst said.

Prior to this move, SAIC has recently reached a merge agreement with Nanjing Automible in order to promote its commercial vehicle business.

Being a leader in diesel engine technology, Shanghai Diesel Engine produces diesel engines used in heavy trucks, buses, engeering machines, ships, agriculture machines and mobile power plants.

The company sold 6,2614 diesel engines in 2006, down 6.3 percent from one earlier; its sales revenue reached 2.988 bln yuan ($396 mln), down 3.9 percent from one year earlier. However, the company posted a net profit of 12.85 mln yuan ($1.7mln) in 2006, up 118.5 percent from one year earlier.