Changhe Auto denies splitting off car operations

Shanghai, July 29 (Gasgoo.com) Changhe Auto will not split off its car-making operations, and its joint venture with Suzuki Motor will go further after the Jingdezhen-based carmaker is restructured, said Li Yao, Chairman of the Board of Jiangxi Changhe Automobile Co., Ltd to (China's) First Financial Daily on Monday.

Early reports said that the loss-making Changhe Auto will transform itself into an aerospace company by acquiring assets of two aerospace companies and selling its own auto-making assets and liabilities to a unit of China Aviation Industry Group Corp. But the assets transfer of Changhe Auto is only a necessary part of the restructuring plan of China Aviation, and Changhe Auto will continue to focus on its car-making operations, and its cooperation with Japanese Suzuki Motor will go ahead as usual and even further in future, said Mr. Li.

The chairman of Changhe Auto added that after the restructuring is finished the new China Aviation Industry Group Corp will provide more substantial support in policy and finance to Changhe Auto for its auto-making projects. The Changhe-Suzuki joint venture will develop to a higher and broader stage by further developing and exporting Suzuki's new models such as 1.8L Liana, Wagon R, and Landy.

Changhe Auto had sold the most mini-vehicles (with 40% market share at its best) in China for six straight years before 2006, but due to lack of product variety and weak control of costs, it made losses in 2006 and 2007. However, the sales of its more various mini-buses and mini-sedans hit 53,744 units in the first half of this year, up 35.26% year on year. The prospects of Changhe Auto's sales have begun to look rosier than expected. 

In its latest five-year plan, Changhe Suzuki vows to reverse its years of losses to profits in 2008, and to raise its vehicle sales from last year's 107,700 units to 400,000 units by 2010. The automaker would also build an independent network for its Changhe brand so as to sell Suzuki and Changhe vehicles through separate channels. And now these ambitions seem not to be abandoned.