China Auto News of the Week (Feb 25-29)

BYD and Brilliance to display models at Geneva Motor Show

By Ally   From:Gasgoo.com February 28, 2008

Shanghai. February 28 (Gasgoo.com) -Chinese automakers Brilliance Jinbei Automotive and BYD Auto will both show models at the Geneva Motor Show in March, reports Automotive News.
 
Brilliance will unveil the BS4 sedan and BC3 coupe alongside a redesigned version of its BS6 sedan. Sales of the BS6 in Europe were halted in the middle of last year after the large sedan did badly in the Euro NCAP crash tests.
 
BYD will show its F3R C segment model that was recently launched in China as well as a larger F6. F1 sales will start in China within two months, while the F3R went on sale in China last July.
 
BYD also will display its large-segment F6, which will debut in China in two months, plus a gasoline-electric hybrid and an electric car.
 
Brilliance and BYD are China's 18th and 19th largest automaker in terms of passenger vehicle sales. Last year the two automakers sold 100,126 and 126,799 vehicles respectively.

Chery Auto says it is ready for IPO but offers no timetable

By Joanne Jiu   From:Gasgoo.com February 27, 2008

Shanghai. February 27 (Gasgoo.com) – After three-year preparations, the Wuhu-based Chery Automobile said it has well-prepared IPO plans and awaiting approvals from regulatory authorities, local newspaper 21st Century Business Herald reports today.
 
The paper, citing unnamed officials from both Chery and the local government, says Chery will seek an overall listing in both Shanghai and Hong Kong market. But it's not clear which market will go first.
 
The timetable for Chery's IPO will not become clear until the conclusion of Beijing Olympic Games in late August, the paper says.
 
Chery's listing plan has been revealed three years ago, but didn't make much progress ever since. Its annual financial report continued to be unqualified from the inefficient finance management.
 
As China's leading local automaker, Chery Auto sold a total of 381,000 vehicles last year, up 24.8 percent from the previous year. Its exports are likely to reach 180,000 units this year after surging 132% to 119800 units in 2007.

Geely to build diesel engine JVs in Shandong and Zhejiang provinces

By Ally   From:Gasgoo.com February 27, 2008

Shanghai. February 27 (Gasgoo.com) – China’s private-owned automaker Geely Group has reached an agreement with two other Chinese companies to build two diesel engine joint venture companies in China.
 
China Yuchai International Limited, through its subsidiary, Guangxi Yuchai Machinery Company Limited ("Yuchai"), together with Zhejiang Yinlun Machinery Co and Geely will build a joint venture engine maker in Tiantai of Zhejiang Province and another one in Jining of Shandong Province.
 
The three-way joint venture companies will be primarily engaged in the development, production and sales of diesel engines and engine parts for passenger vehicles. It will have an initial annual output of 100,000 units before it could expand to 300,000 units.
 
Yuchai will be the controlling shareholder with a 52 percent stake in both JV companies while Geely and Yinlun will each hold 30 percent and 18 percent stakes.
 
Yuchai engages in the manufacture, assembly, and sale of a wide array of light-duty, medium-sized and heavy-duty diesel engines for trucks, buses, and cars in China. In 2007, Yuchai sold approximately 383,000 diesel engines and was consistently ranked No. 1 in unit sales by China Association of Automobile Manufacturers.
 
Zhejiang Yinlun Machinery Co's main products include inter cooler, oil-cooler and radiator, with annual production capacity of 5 million units, the company said on its official website.

Shanghai GM quits production of Chevrolet Sail

By Ally   From:Gasgoo.com February 27, 2008

Shanghai. February 27 (Gasgoo.com) - Shanghai GM has decided to stop production of its Chevrolet Sail model and may replace it with Opel Corsa, local newspaper Beijing Youth News reported today.
 
Official statistics indicate that Shanghai GM only produced 9 Sail vehicles in January this year. Last year it sold 18,961 Sail vehicles, a 23 percent decline from a year earlier. A spokesman from Shanghai GM confirmed that the joint venture automaker has officially halted the production of Sail vehicles starting in January.
 
Eight years after it was locally produced and launched in Chinese market, the model’s production has finally come to a halt.
 
"Some 50,000 units of Sail were sold in the Chinese market in the first year after it arrived here, but since then, it has been facing tougher and tougher competitions from rivals such as Polo and Fit," said Ding Lei, General Manager of Shanghai GM.
 
The price of Sail also dropped from around 100,000 yuan ($13,988) to 50,000 yuan ($6,994) last year, but repeated price cuts failed to invigorate the slump sales.
 
Besides Sail vehicles, Shanghai GM also produces Chevrolet Aveo compact sedan and Aveo and Epica at its plant in Yantai, Shandong province. Last year the automaker sold 87,031 units Lova alone, up 136 percent from the year earlier.
 
The report also said the automaker may bring the Opel Corsa to replace the model, but the story has not been confirmed by Shanghai GM officials.

Denso to establish joint venture in eastern China to produce bus air condition systems

By Tony   From:Gasgoo.com February 26, 2008

Shanghai. February 26 (Gasgoo.com) - DENSO Corporation and GAC Corporation, a subsidiary of DENSO, have formed a joint venture with Yangzhou Jiexin Auto Air-Conditioner Co., Ltd. located China’s eastern province of Jiangsu to produce bus air conditioning systems, local media reported yesterday.
 
The DENSO Group and Yangzhou Jiexin Auto Air-Conditioner will form the new company, Yangzhou Jiexin DENSO Air-Conditioner Co., Ltd. (tentative name), in March 2008, each providing 50 percent of the capital. In April 2008, the new company will start producing air conditioning systems for bus manufacturers in China, using the plant and equipment of Jiexin Auto Air-Conditioner. The new investment will total approximately US$2.5 million, according to Japan Corporate News.

"Further development of highways and expressways across China is expected to increase demand for intercity express buses and sightseeing buses, which have a high installation ratio of air conditioning systems," said Nobuaki Katoh, senior managing director responsible for DENSO's Corporate Center and Thermal Systems Business Group. "We target annual sales of about 5 billion yen for the new company in 2010."

DENSO Corporation, headquartered in Kariya, Aichi prefecture, Japan, is a leading global supplier of advanced technology, systems and components. Worldwide, the company employs approximately 112,000 people in 32 countries and regions, including Japan. Consolidated global sales for the fiscal year ended March 31, 2007 totaled US$30.6 billion.
 
Company Profile of Joint Venture

Name:                    Yangzhou Jiexin DENSO Air-Conditioner Co., Ltd.  (tentative name)

Establishment:     End of March, 2008 (scheduled)

Location:                Jiangsu Industrial Zone, Yangzhou, Jiangsu, China
                                  (Current site of Yangzhou Jiexin Auto Air-Conditioner, approximately 300 km northwest of Shanghai)

Capital:           US$1.8 million

Ownership:    50 percent owned by Yangzhou Jiexin Auto Air-Conditioner Co., Ltd.
                         30 percent owned by DENSO (China) Investment Co., Ltd.[1]
                         20 percent owned by GAC Corporation[2]

Investment:    Approximately US$2.5 million

President:     Takanobu Asai (current Chief Engineer of the Climate, Cooling and Heating Product Division)

Business:      Production and sales of bus air conditioning systems

Guangzhou Auto plans to raise $900 M by Shanghai and H.K. IPOs

By Tony  From:Gasgoo.comFebruary 25, 2008

Shanghai. February 25 (Gasgoo.com) – China’s fourth largest auto group Guangzhou Auto Group is restarting its IPO initiatives in both in Shanghai and Hong Kong markets, Chinese Business News reported today.
 
Guangzhou Auto plans to raise at least $900 million from both Shanghai and Hong Kong markets and the money will be used to fund research and development of upscale sedans. Guangzhou Auto is planning to develop middle and high end segment sedans in cooperation with foreign automakers, the news report said.
 
Guangzhou Auto’s listing plan, which was first unveiled as early as in 2002, has long been delayed due to China’s anemic stock market and stagnant automobile market between 2002 and 2005.
 
Besides Guangzhou Auto, China’s other major players, Changan Auto, Beijing Auto and Chery Auto are also planning IPOs either in Shanghai market or overseas markets.
 
Last year, Guangzhou Auto’s total sales revenue reached RMB 100 billion yuan ($13.97 billion) and its net profit reached RMB 10 billion ($1.40 billion).

Soaring ore prices to make a dent in automakers profit margin

By Ally   From:Gasgoo.comFebruary 25, 2008

Shanghai. February 25 (Gasgoo.com) - A 70 percent iron ore price hike this year will drive steel prices higher, which will in turn cut the profit margin of Chinese automakers by 1 percent, according to a report prepared by Industrial Securities Co.
 
The report said that if steel price raise an average of 400 yuan ($56) a ton, the Chinese auto industry will lose 6 billion ($840 mln) to 6.4 billion yuan ($896 mln) in profit gains.
 
Since the profit margin of China's auto industry is only 5 percent in 2006, the one percent drop would be a substantial loss for the industry. In 2006, total revenue of China's auto industry reached 1,529 billion yuan ($21.35 billion), but total profit was only 76.8 billion yuan ($10.7 billion).
 
Industry analysts say steel prices will continue to grow in the next few years. To confront this situation, experts urge automobile companies to take steps to cut costs and save raw materials.
 
Earlier last week, Asia's three largest steelmakers - Nippon Steel Corp., JFE Holdings Inc and Posco have agreed to a 65 percent increase in iron ore contract prices with Brazilian ores suppler Companhia Vale do Rio Doce starting April 1. The price settlement was 35 percent higher than some Chinese analysts estimated.
 
China's largest steel maker, Baosteel, agreed on last Friday to pay 65 percent more for iron ore to Brazil's Cia Vale do Rio Doce, for 12 months beginning April 1, 2008, according to Xinhua News Agency.
 
Baosteel is expected to raise its steel product prices for the second quarter at the end of this month to cover the rising costs of the raw material. Soaring coal and shipping costs have combined to push up the raw material cost and squeeze steel makers' profit margins.
 
Analysts said a steel price hike would add costs for many industries, such as auto, refrigerator and washing machine manufacturers, which are heavily reliant on steel as a raw material. Rising costs will eventually be passed on to consumers.