Suzuki withdraws capital from Changhe Suzuki, Baoneng likely to get involved
Shanghai (Gasgoo)- Changhe Auto announced on June 15 that Suzuki, the Japanese shareholder of Changhe Suzuki, has transferred its entire stake in the Sino-Japanese joint venture to Changhe Auto, which made Changhe Suzuki the wholly-owned subsidiary of the Chinese investor, according to local media. The equity transfer has been approved by the government and the administrative registration of the joint venture's equity and name changing has been completed on May 30.
Reportedly, Baoneng Group and Changhe Auto have built a joint working team to discuss and research the detail plan about Baoneng acquiring Changhe Auto's stakes.
Limited by monotonous car portfolio, retarded product upgrading, relatively low product positioning and lack of advanced technologies, Changhe Suzuki has faced depressed performances in sales and profit in recent years.
According to China Association of Automobile Manufacturers (CAAM), Changhe Suzuki suffered a month-on-month decline of 10% with only 1,301 units delivered in April. By the end of April this year, the joint venture's year-to-date sales reached 5,301 units, ranking 98th among all Chinese automakers.
The stagnant sales performance inevitably led to an unpleasant profit for Suzuki.
In March, Yao Zhenhua, chairman of Baoneng Group, said that the group plans to invest RMB 10 billion annually in the R&D of automobile businesses and successively build R&D centers in Shanghai, Guangzhou, Shenzhen, Chongqing, Xi’an as well as foreign countries like Japan, Germany and the U.S., etc. Some reports analyzed that Suzuki's capital withdrawal possibly makes Baoneng Group see the opportunity to further enlarge its automobile cause. In addition to rich resources in mini and sub-compact cars, Changhe Suzuki has obtained governmental approval in January to manufacture all-electric passenger vehicles.
BAIC Group, who became the largest shareholder of Changhe Auto in 2013, has reportedly been replanning for its subsidiary's development when Suzuki let go of the joint venture.
Xu Heyi, chairman of BAIC Group, announced at the end of last year, BAIC Weiwang was officially merged into Changhe Auto as an electric vehicle brand. At the same time, the group's mini car businesses were also incorporated into Changhe Auto.
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