Roewebadge.jpgShanghai
Automotive, China's second largest carmaker, wants to get bigger. The
company plans to spend 19bn yuan to buy out the stakes that its parent,
SAIC, holds in two JVs with Volkswagen and General Motors.

Shanghai Auto, the publicly listed arm of SAIC, will buy the stakes
in the two JVs — Shanghai General Motors and Shanghai Volkswagen —
and a clutch of other units from its state-owned parent using its own
stock.

BusinessWeek describes the deal
as “basically an intra-company asset swap,” but it will enable Shanghai
Auto to become the biggest listed car maker in China and so raise funds
more easily.

The move has been driven by the Chinese government's desire to
consolidate and strengthen its domestic industry, which suffers from
over-production and intense competition — there are more than 100
carmakers competing in China.

Nevertheless, it is a fast-growing market — unlike the domestic
markets of many foreign carmakers now competing in China. So whereas
many of its western counterparts struggle to grow their top line, SAIC expects revenue to grow 20% this year to 200bn yuan.

In another sign of its growing self-confidence, SAIC showed its
first home-grown car, the Roewe, at the recent Beijing Car Show last
month. More on the Rover-derived Roewe and competition in China's car
market in this EngagingChina story.

Elsewhere on the automotive front:

  • Antonov has signed a heads of agreement for a licence to produce its innovative automatic gearbox with Geely Automotive, a leading Chinese carmaker. AIM-listed Antonov
    has struggled to get mainstream carmakers interested in its novel
    gearbox which is claimed to offer greater efficiency, faster
    acceleration and fuel savings of up to 20%. More on the Antonov gearbox
    here.

  • China's car market may be saturated but there's still a lot for
    western manufacturers to play for in commercial vehicles, according to this
    BusinessWeek story. That's why DaimlerChrysler , the world's biggest
    truck maker, has agreed to spend $104m to acquire a 24% stake in
    Beijing-based Beiqi Foton Motor, China's maker of biggest light trucks.

  • Dongfeng Motors and Ningbo-based car parts maker Minth Group are among several Chinese firms looking at acquiring assets from troubled US vehicle suppliers
    Delphi and Visteon, according to the South China Morning Post. Delphi,
    the main supplier to General Motors, filed for bankruptcy last year and
    said it would sell or close some units. Visteon, one of Ford's main
    suppliers, is also looking to close or dispose of factories.


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