Last weeks First Economic Daily newspaper reported that Guangzhou Auto and Changfeng Auto were in take over talks. This week, the talks have turned into facts: Guangzhou Auto plans to buy Changfeng Auto and will take control in the fourth quarter of 2008. The Changfeng-Mitsubishi joint venture will continue under Guangzhou management, just as Mitsubishi announced a new range of engines for the Chinese market.
Rumors of Guangzhou Auto wanting to purchase a smaller rival for quite some time, with Guangzhou Auto being linked to buying Beijing Auto. Talks between Changfeng and Guangzhou Auto have been reportedly going on for over a year, Changfeng currently produces trucks for the Peoples Liberation Army, as well as certain Mitsubishi SUV’s from CKD kits imported from Japan. By gaining control of Changfeng, Guangzhou sets to gain Changfengs automobile production factories which are located in the South of China. Changfeng have also been linked to buying the stricken Hummer brand from General Motors, although new further news on this situation has risen.
Guangzhou Auto executives will be feeling confident about purchasing Changfeng Auto, as a recent press release showed that Guangzhou Auto was sitting pretty after making over 6 Billion RMB profit in the first six months of 2008.
Mitsubishi have been losing money in the Chinese automarket place in recent years, with the takeover of Changfeng, Mitsubishi will get a certain amount of time in which to restructure their Chinese market offerings.
SUV-maker Changfeng is lucky to have an industry giant rescue it from the tsunami of rising fuel prices, that all the other little SUV makers will soon face.
Dragin,
You’re not far wrong. SUV sales may be soaring now, but wait until gasoline hits 7.8rmb a litre. Then we’ll see what SUV sales are like. Even the boss of Kia China claims that SUV sales wont go down in China with higher gas rates, we’ll wait and see on that one….