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FAW in merger talks with Brilliance China

By Bi Xiaoning (China Daily)
Updated: 2009-06-18 08:09

Automaker FAW Group of Changchun in Jilin province is said to be in merger talks with Liaoning's Brilliance China Automotive Holdings Limited, which could lead to FAW acquiring the smaller Brilliance and its three listed subsidiaries.

The acquisition, if it goes through, will catapult FAW to be China's largest automobile producer, overtaking the Shanghai Automotive Industry Corporation. FAW's output in 2008 totaled 1.5 million units. The company said earlier that it has set a sales target of 3 million units for 2012.

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Tian Hongfu, deputy director with the company's planning department, said that the situation is still unclear and declined to comment further.

Industry experts said Brilliance's production capacity reached 800,000, which made it an ideal target for FAW to expand business.

Rapid expansion has strained Brilliance' financial resources. The company was further hit by slow sales in 2008 when the company sold a total of 285,000 units, which was less than 40 percent of its total production capacity.

In April, Brilliance Auto chairman Qi Yumin said in the Shanghai auto expo that he would not exclude any reforming proposal, "as long as it can benefit the development of the brand".

Brilliance is owned by the Liaoning provincial government. The company has invested in about 100 companies, with total assets amounting to 30 billion yuan.