Guangzhou Auto acquiring Changfeng Motor

Shanghai, May 13 (Gasgoo.com) Guangzhou Auto is expected to announce its acquisition of Hunan-based SUV-maker Changfeng Motor on May 19 at the earliest, 163.com reported today, citing reliable sources.

An auto industry official of Hunan province in southern China recently confirmed the Changfeng Motor's close contact with Guangzhou Auto. On April 15 this year, when Changfeng's CS7 hybrid SUV rolled off the production line, an official of the provincial government also said that Changfeng Motor will be merged into Guangzhou Auto for restructuring.

Changfeng Motor builds Mitsubishi Pajero SUVs as well as its own-brand Liebao SUVs in Changsha city, capital of Hunan province. If the SUV-maker is acquired by Guangzhou Auto, which is one of the top five Chinese automakers, Changfeng Motor will have its product strategy integrated into the plans and development of the Guangzhou Auto.

To own a hefty bargaining chip in the merger talks, Changfeng Motor has started developing its sedan models. "We will unite with a powerful giant to develop our sedan models, to have a strong company to speed up our growth -- this will be a good thing," Changfenmg Motor general manager Chen Zhengchu said recently.

Currently, Guangzhou Auto's 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.

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.

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