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| EVENTS |
| Rising car maker launches subsidiary |
| 2005-08-18 16:58:54 |
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GUANGZHOU: China's rising auto maker Guangzhou Automobile Industry Group (GAIG) yesterday launched a share-holding subsidiary jointly with four new investors.
GAIG, controlled by the Guangzhou municipal government in Guangdong Province, will have an overwhelming stake of 91.93 per cent in the shareholding company, or Guangzhou Automobile Group Co Ltd, GAIG said.
The new firm will have net assets of 3.5 billion yuan (US$423.2 million), it said.
As the second biggest shareholder, Wanxiang Group a privately-owned auto spare parts giant in Zhejiang Province will have a 3.99 per cent stake in Guangzhou Automobile Group Co Ltd.
The remaining shares will be held by State-owned China National Machinery & Equipment Corp, Guangzhou Iron and Steel Group a local steel maker and Chimelong, a privately-owned hotel operator in Guangzhou.
Guangzhou Automobile Group will incorporate almost all of GAIG's businesses and pave the way for stock market listing, said Zhang Fangyou, chairman of the share-holding company.
But Zhang did not reveal the venue and timetable of the expected listing, just saying: "We will go public at a proper time and in a proper place according to market conditions."
The company now has a Hong Kong-listed affiliate, Denway Motors.
Analysts said Guangzhou Automobile Group Co Ltd needs a lot of money to facilitate its fast-expanding businesses.
The company said it aims to increase its annual car manufacturing capacity to 1.1 million units by 2010 from some 300,000 units at present.
It runs a 240,000-unit car joint venture in Guangzhou with Japan's Honda Motor.
The venture is building a new 120,000-unit factory for 2.2 billion yuan (US$266 million).
Guangzhou Automobile Group has a totally export-oriented car joint venture in Guangzhou with Honda and Dongfeng Motor, one of China's top automakers.
The venture, which has an annual production capacity of 50,000 units, started to export compact cars to Germany last week.
Guangzhou Automobile and Japan's Toyota are also building a car joint venture in Guangzhou for US$462 million.
The venture will have an annual production capacity of 100,000 cars initially and start production in the first half of next year.
Guangzhou Automobile said it also aims to have an annual manufacturing capacity of 230,000 trucks and buses by 2010.
Last week, the company clinched a deal with South Korea's Hyundai Motor to spend US$1.24 billion in building a bus and truck joint venture in Guangzhou.
The new venture will have an annual production capacity of 200,000 buses and trucks by 2010.
Guangzhou Automobile currently runs a bus joint venture in Guangzhou with Japan's Isuzu.
Guangzhou Automobile sold 210,000 vehicles and 620,000 motorcycles last year.
Zhang Xin with Guotai & Jun'an Securities said Guangzhou Automobile will possibly go public in the domestic stock market, instead of Hong Kong.
"Hong Kong listing plans of many other Chinese automakers have been suspended as overseas investors have little interest in them as a result of the sharp deceleration of the domestic auto market and their eroding profits," Guotai & Jun'an's Zhang said.
Shanghai Automotive Industry Corp, Dongfeng Motor and Beijing Automotive Holding Corp had planned to go public in Hong Kong last year, but none of them has succeeded so far.
Sales of domestic-made vehicles grew by 4.6 per cent year-on-year to 2.2 million units in the first five months of this year.
The growth was down from 15 per cent last year and 34 per cent in 2003.
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