China Auto News of the Week (December 3-7, 2007)

Dongfeng plans to take over Hafei, government official confirms
By Tony   From:Gasgoo.com December 03 2007

Shanghai. December 3 (Gasgoo.com) – Dongfeng may plan to offer 2 billion yuan ($270.54 million) to buy at least 50 percent stakes of Hafei Group, Chinese newspaper 21st Century Business report reported yesterday.
 
Citing an unnamed source from Hafei Group, the report said PSA Peugeot Citroen’s plan to cooperate with Hafei has been scrapped. However, Hafei Group’s owner AviChina Industry & Technology Company is in talks with Dong Auto Group, which offers 2 billion yuan ($270.54 million) to take over at least 50 percent stakes of Hafei Group.
 
Separately, a National Development and Reform Commission official confirmed to the newspaper that the talks between Dongfeng and Hafei’s owner have been going on for months.
 
However, senior officials from both side declined to comment on the possible tie-up.
PSA Peugeot Citroen and Hafei Group signed a memorandum of understanding in July that the two parties will create a 50-50 joint venture to manufacture and sell vans with ten seats or less in Shenzhen.
Denis Duchesne, CEO of the French carmaker's China operations, said the vans will be made under the Peugeot, Citroen and Hafei badges with an initial capacity of 100,000 units a year. Currently Hafei's production base in Shenzhen already has a production capacity of 100,000 units. The tie-up with Hafei is PSA Peugeot Citroen's latest drive to boost its China sales to 600,000 vehicles in 2010 from 200,000 units last year, Duchesne said.
The French carmaker currently assembles cars in the central city of Wuhan with Dongfeng Motor Corp, China's No. 3 auto group. However, it is still lagging behind its rivals in terms of China sales. General Motors, Volkswagen, Toyota and Honda all run two vehicle ventures in the country with local partners.

 To revive operations in China, Fiat names new executive and introduces new cars
By Joanne Jiu   From:Gasgoo.com December 03 2007

Shanghai, December 3, (Gasgoo.com)- In order to turn around the previous sluggish performance in China, Fiat has named a new chief representative for business operations in China while planning to introduce three new car models early next year, Chinese newspaper Beijing News reported.
 
Paolo Arpellino, 45, will replace Andrew Humberstone to take charge of Fiat's business development and daily operations in China, effective on November 1 this year, Fiat Group China announced last Friday. Prior to this appointment, Fiat's joint venture with Nanjing Automobile Group has witnessed frequent personnel changes.
 
The three new car models to be introduced to Chinese market early next year include Grande Punto, Bravo and Linea. These car models are still under industrial certification and will be sold through Nanjing Fiat's sales networks, the Beijing News said.
 
"We sell new imported cars here to bolster the brand's presence in Chinese market; volume is not the main goal,” said Jing Boqing, business director of Nanjing Fiat. Jing added that currently the major task for the Nanjing Fiat is to exploit the potential of the existing products.
 
The joint venture Nanjing Fiat, is on the verge of a split as both Fiat and Nanjing Auto are seeking new alliances--Fiat is consolidating its partnership with Chery Automobile and SAIC while Nanjing Auto has just reached a deal with SAIC.
 
Fiat's CEO Sergio Marchionne told the Reuters in July that he insisted on the target to sell 300,000 vehicles in China by 2010, but Nanjing Fiat sold only 11,265 vehicles in the first half of this year, down 30 percent from one year earlier. The money-losing JV had originally forecasted to sell 50,000 vehicles for 2007. Marchionne complained that its Chinese partner was focusing too much on developing its own brand—MG.
 
Najing Fiat was established in April 1999 by Fiat and Nanjing Auto. The total investment was 3 billion Yuan, with each partner holding a 50 percent stake.
 

PSA Peugeot Citroen announces new leader in China
By Ally   From:Gasgoo.com December 05 2007

Shanghai. December 5 (Gasgoo.com) – PSA Peugeot Citroen announced last evening that it would appoint Claude Vajsman as the CEO of its joint venture in China, effective on January 1, 2008, according to the automaker's press release on its official website.
 
The announcement came just less than seven months after Denis Duchesne was appointed as CEO of the company's China venture. Claude Vajsman, 56, has been with the company since 1977, and he was currently worked as deputy general manager at Peugeot's China venture,
 
A company spokesperson said Claude Vajsman would be responsible for PSA Peugeot Citroen's business operations in China. This personnel change, however, has no relation with PSA's failure to form partnership with Hafei Automobile, the spokesman said.
 
One day earlier, Chinese media reported that PSA Peugeot Citroen's plan to cooperate with Hafei Group has been scrapped; however its Chinese partner Dongfeng Auto Group is in talks with Hafei Group. Dongfeng offers 2 billion yuan ($270.54 million) to take over at least 50 percent stakes of Hafei Group.
 
The French carmaker currently assembles cars in the central city of Wuhan with Dongfeng Motor Corp, China's No. 3 auto group. However, it is still lagging behind its rivals in sales. Foreign auto giants, such as General Motors and Ford each operate a commercial vehicle as well as a car joint venture in China.
 
PSA Peugeot Citroen originally planed to make commercial vehicles through partnership with Hafei Group but then failed.
State-owned Hafei, based in northeast China, makes mini-cars, mini-vans, sedans and multi-purpose vehicles. The firm, capable of producing 400,000 vehicles and 450,000 engines per year, sold 231,821 vehicles in 2006.

 
China's heavy truck sales up 65.4 percent in Jan-Oct
By Ally   From:Gasgoo.com December 07 2007

Shanghai. December 7 (Gasgoo.com) –In the first ten months of this year, China's heavy truck sales surged 65.40 percent to 412,657 units while total production went up 68.84 percent to 416,343 units, according to the latest report prepared by China Association of Automobile Manufacturers (CAAC).
 
In October, China's heavy-duty truck sales reached 37,800, down 6.20 percent month-on-month and sales reached 35,700 units, down 4.29 percent month-on-month, the CAAC report said.
 
In the first 10 months, sales of 32-ton or even heavier trucks soared 265.62 percent to 1,700 units, while sales of 26-32 ton heavy trucks went up 109.62 percent to 27,100 units and sales of 19-26 ton trucks reached 37,100 units.
 
In addition, sales of incomplete light trucks increased by 39.84 percent year on year to 184,400 units in the first ten months; semi-trailer truck sales surged 107.37 percent to 150,600 units.
 
The top six sellers were FAW(83,500 units), Dongfeng (73,000), Beiqi Foton(28,000), Shanxi Automobile(49,900), SAIC-Iveco(20,900) and Beijing Benz(13,700), of which Beiqi Foton and Shanxi Automobile increased their sales by 120.17 percent and 87.55 percent respectively.
 
"China's economic growth and fixed-asset investments are a driving force behind heavy-truck sales," said Zhang Yupu, Chairman of the Board of Shaanxi Automobile Group. "But the growth is going to slow down in the next one or a half years,'' he added.

China auto parts exports hit $13.25 billion, up 30 percent year-on-year
By Tony   From:Gasgoo.com December 06 2007

Shanghai. December 6 (Gasgoo.com) – In the first ten months this year, China exported $13.25 billion worth of auto parts products, up 30 percent year-on-year, China’s Ministry of Commerce said.
 
"The total auto parts exports in the first nine months have surpassed the total exports last year," said Wang Qinhua, deputy director of State Imports and Exports office of Mechanical and Electricity Products.
 
"China-made auto parts are increasingly recognized by global automakers and entering global OEMs sourcing lists,” Wang added.
 
"China’s total automobile output is expected to reach 9 million units this year and the country is likely to become the second largest automaker in the world,” said Huo Guangyi, chairman of the Automobile and Motorcycle Parts Division of All-China Federation of Industry and Commerce.
 
Huo said that China has 4,712 major auto parts suppliers, which yields a total output value of 550 billion yuan ($74.40 billion).
 
Last year, China exported a total value of $11.5 billion of auto parts, up 35 percent from one year earlier.
 
"All global auto parts giants listed in world top 500 have business operations in China,” Huo said. “They have established either joint ventures or wholly owned businesses in China.”
 
Despite its rapid growth in recent years, China’s auto parts industry are still plagued by many problems, such as low industry concentration, lack of widely recognized brands and weakness in high technology, Huo said.
 
Furthermore, auto parts business in China is becoming less profitable due to intensifying competition and fast growing operation costs, Huo added.