China auto news of the week (Jan1-4, 2008)

 

 

 

Shanghai. January 4 (Gasgoo.com) – National Development and Reform Commission, China’s powerful top economic policy-making and regulatory body, has recently approved a joint venture project between Chery Automobile and Quantum LLC, a U.S. unit of Tel Aviv-listed holding company Israel Corp, China’s official media Xinhua News Agency reported today.

 

The project, with a total investment of one billion U.S. dollars (RMB 7.36 billion), is expected to turn out 150,000 units a year, lifting Chery's total production capacity to 500,000 vehicles.

 

These vehicles to be produced by the joint venture will mainly be exported overseas, Xinhua said, however the venture is “not prepared” for export to the U.S. market, according to a Chery official.

 

The venture will make four new models, including sedans and sport-utility vehicles. The vehicles to be produced at the joint venture include 40,000 B21 vehicles, 25,000 B22 vehicles, 20,000 T21 vehicles and 65,000 M21 vehicles.

 

Quantum LLC, a subsidiary of Israel Corp, will spend US$225 million for a 45 percent stake in the new entity and is also expected to provide an additional US$180 million guarantee to help Chery fund additional investment, according to a media report.

Rather than direct financial investments, Chery will provide land and technology in return for a 55 percent stake of the joint venture.

 

Parent Israel Corp is one of Israel's major holding companies. Its main activities are focused on chemicals, shipping, oil and energy, advanced technology.

Last year, Chery sold a total number of 381,000 vehicles, up 24.8 percent from one year earlier, becoming China’s forth largest automaker in terms of sales.

 

The company exported 119,800 vehicles in 2007, up 132 percent from one year earlier. Chery has been China’s biggest sedan exporter for five years in a row.

 

 

 

Shanghai. January 4 (Gasgoo.com) – China's automobile industry will probably grow 15 percent in 2008, a projected growth pace much slower than last year, according to a senior research fellow at State Information Center, a government-run think-tank affiliated to China's central government.

 

Liu Ming, the director of market research department and chief research fellow at State Information Center said, under the influence of tightened macro-economic policies by Central government, China's automobile industry will maintain a fast growing pace, but it will be slower than 2007; it will grow at about 15 percent this year.

 

In 2007, China sold 8.5 million vehicles, up 21 percent from one year earlier. This is the fourth consecutive year that China's auto sales growth is higher than 20 percent.

 

Another automobile industry expert, Yao Jie, deputy secretariat of China Automobile Industrial Association, agreed that China's automobile industry will maintain a steady growth in 2008 due to favorable macro-economic conditions. "Automobile consumption will continue to play a leading role in China's domestic consumption."

 

Yao Liu concluded that China's passenger vehicle sales will continue to grow 20 percent in 2008. "We believe that China's passenger vehicle industry has entered a fast-growing track, and it is very likely to continue a similar growth rate in the next couple of years."

 

However, China's commercial vehicle industry will grow at a slower pace due to macro-economic policies, Yao said. "It's hard to believe that commercial vehicles will maintain an 18 percent growth in 2008, if you take into consideration of several factors, like oil prices."

 

 

 

Shanghai, January 3, (Gasgoo.com)--Shanghai Automotive Industry Corporation (SAIC) announced today that it has acquired a 50.32 percent stake of Shanghai Diesel Engine Co. (SDE) for 923.42 million Yuan ($127 million).

 

Last week, Shanghai Electric Group Co Ltd, a company that formerly held 50.32 percent stake of Shanghai Diesel Engine Co., signed an agreement with SAIC to sell up its entire pocession of Shanghai Diesel stakes to SAIC three days after it acquired Nanjing Auto.

 

"The deal will help Shanghai Diesel’s tap into its market potential and improve its competitiveness. It will also enhance SAIC's capability in commercial vehicle sector," SAIC said in an official announcement.

 

The acquisition of Shanghai Diesel will create a chance for SAIC to catch up in commercial vehicle sector. On the other hand, the deal will also deliver Shanghai Diesel from a difficult situation where it has been hamstrung by a narrow product portfolio coupled with scare orders from auto OEMs, according to SAIC board chairman Hu Maoyuan.

 

Shanghai Diesel, a leader in China's internal-combustion engine industry, makes various types of diesel engines for heavy-duty vehicles, passenger cars, engineering machinery, ships, mobile power station etc. It also exports diesel engines to more than 50 countries and regions around the world.

 

The diesel maker's mid-year financial report shows sales of ship engines slip 64 percent year-on-year due to sluggish river transport industry. Analysts pointed out that Shanghai Diesel’s slow growth was mainly attributable to its inability to work in alliance with major automobile and ship manufacturers. 

 

 

 

 

Shanghai. January 3 (Gasgoo.com) – Chery Automobile will definitely establish partnership with Italian automaker Fiat Group to build a passenger vehicle joint venture in China in 2008, an official from Chery Automobile confirmed recently.

 

Besides establishing the joint venture, Chery and Fiat also plan to locally produce Fiat Linea, Bravo and Grand Punto after they are imported to Chinese market, according to Jin Gebo, the director of Chery's administrative office.

 

This August, Fiat and Chery have signed a memorandum of understanding to establish a 50:50 passenger car joint venture and an engine supply contract, but there are no further negotiation reported until very recently, when Fiat announced to pull out of Nanjing Automobile.

 

Fiat's venture with Nanjing Automobile had been losing money for years; and China's SAIC has achieved a long expected acquisition of Nanjing Auto to follow government calls for the creation of a national champion to challenge foreign automakers in China.

 

"Fiat aims to boost China sales to 263,000 cars a year by 2010 from 32,000 units in 2006, and will introduce a slew of new models into the country in coming years," Fiat CEO Sergio Marchionne said in a statement.

 

 

 

Shanghai. January 3 (Gasgoo.com) – Japanese commercial vehicle maker Isuzu has established a 50-50 joint venture sales company with its Chinese partner, the Chongqing-based Qingling Motors, Chinese newspaper Shanghai Securities News reported today.

 

The two sides have signed a joint venture agreement, the report said. Under the agreement, the two sides will each invest USD 2.3 million to form Qingling-Isuzu (Chongqing) Sales Company. The joint venture sales company will sell Qingling-made Isuzu vehicles and auto parts; it will also provide aftermarket services to Isuzu brand vehicles.

 

Qingling has been Isuzu’s most important partner over past year. However, Isuzu has become unhappy about the Qingling Motors’ performance in recent years. Last year, Qingling Motors sold only 30,000 vehicles, while its one-time lesser competitor Changan Motors sold 850,000 vehicles in the same year.

 

Under Isuzu’s mid-term plan, the Japanese automaker plans to reach USD 17.4 billion in sales revenue from April 2008 through March 2011, an increase of 21 percent from the current level. Isuzu also hopes to make USD 1.3 billion in operational profits during the same period.

 

The newly established joint venture sales company plans to sell 1,000 Isuzu vehicles annually in 2008 and 2009, according to Shanghai Securities News.

 

 

 

Shanghai. January 3 (Gasgoo.com) – Thirty-nine vehicle models have won production licenses from Chinese authorities, according to a new vehicle catalogue prepared and released by National Development and Reform Commission, China’s all-powerful economic regulatory body.

 

Under the catalogue, about 80 percent or 31 new models to be produced are local brand vehicles. Major Chinese domestic automakers, Chery, Geely, Tianjin-FAW, Hafei Group, Maple, Changhe, Changan, all have new vehicle model to be launched in the first half of 2008.

 

Hafei Group has six models and FAW-Tianjin has three models, Vela, Weizhi and Xiali listed in the catalogue. Chery Auto has four models to be launched in the first half of 2008.

 

Among joint venture brands, Honda Accord has two models listed in the catalogue, each of which is powered by 2.0 Liter and 3.5 Liter engines respectively. Mazda 2 is also listed in the catalogue.