Guangzhou Auto set to buy Changfeng Motor

Shanghai, August 11 (Gasgoo.com) After long talks, Guangzhou Automobile Group is set to acquire Changfeng Motor by buying out the latter's shares by the end of this year, and meanwhile Mitsubishi Motors' loss-making operations in China are likely to get opportunities for recovery, said First Financial Daily today.

Reportedly, Guangzhou Auto will buy out and control Changfeng Motor, a Chinese partner of Japan's Mitsubishi Motors. The Japanese carmaker, who is now marginalized and losing money in China's auto market, will also sell some of its stake in the joint venture with Changfeng Motor to Guangzhou Auto for setting up a new venture. However, no one of them has confirmed this mode of cooperation yet.

According to an earlier report, the chairmen of Guangzhou Auto and Changfeng Motor flew together to Mitsubishi Motors' headquarters in Nagoya, Japan at the end of July, and this is seen as a sign that Guangzhou Auto's acquisition (of Changfeng Motor) and its partnership (with Mitsubishi Motors) will be clinched soon.

Guangzhou Auto aims to become China's fourth largest automaker and one of the world's top 500 companies by 2010. To achieve this ambition, mergers and acquisitions seem to feature prominently in its expansion strategy.

In Guangzhou Auto's current product lineups, the profit-making models are sedans and MPVs, mostly made by its joint ventures with two Japanese carmakers: Toyota and Honda. In the SUV segment, Changfeng Motor, 20% controlled by Mitsubishi Motors, has the capabilities and expertise to fill this gap for Guangzhou Auto.

Mitsubishi Motors, one of the first global carmakers that launched their operations in China, has not developed so successfully in recent years in the fast-growing Chinese market. Its prospective tie-up with the booming Guangzhou Auto is expected to boost this Japanese carmaker's recovery and expansion in the China market.