China: Changhe stuns partner Suzuki with decision to exit car making business
By: Glenn Brooks, Wednesday, July 23, 2008, AutomotiveWorld.com
China's Changhe Automobile has announced its intention to stop producing cars, adding that it will withdraw from its joint venture with Suzuki.The partners currently build locally adapted versions of Suzuki's Landy minivan, as well as the Alto and Wagon R small cars. Additionally, Changhe makes various versions of its own Ideal II. Though its maker has not publicised the fact, the NICE Ze-O electric car that had its world premiere at this week's London motor show is an adapted version of the Ideal II. At this stage, how Changhe's plans will affect this start-up are not clear.
Jiangxi Changhe Automobile Company, the Jingdezhen-based parent of Suzuki's partner, has chosen to shift out of vehicle production due not only to ongoing losses but also to its increasing focus on the aerospace side of its business. Changhe recently announced an intention to acquire two aerospace units worth up to Yuan 920m (US$134m) from China Aviation Industry Corporation, with the intention of eventually transforming itself into a plane maker.
The firm is controlled by the Hong Kong listed AviChina Industry & Technology Company. In a statement to the Hong Kong stock exchange seen by Reuters, Changhe Auto says it will transfer all of its assets and liabilities and issue up to 90 million new shares to state-run China Aviation. The latter controls the country's two soon to be merged aircraft makers, AVIC I and AVIC II.
Suzuki is yet to comment publicly on these developments and what, if any impact it will have on investment decisions for its other Chinese joint venture with Changan, which is also the partner of Ford, Mazda and Volvo. It is not necessarily assumed that the Japanese firm intends to or indeed will be allowed to take control of the loss-making Changhe-Suzuki joint venture, which includes its sales and distribution network.
Published on Wednesday, July 23, 2008
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