First Automotive Works Corp (FAW), China's No.2 auto group in
2006 sales, yesterday denied a report that it would buy Chrysler
Group, the struggling US arm of DaimlerChrysler.
The Shanghai-based Oriental Morning Post yesterday
reported that state-owned FAW has shown an interest in acquiring
Chrysler as a quick way to have independent international brands,
quoting people familiar with the matter. Representatives had been
sent to the US for negotiation, the report said.
Earlier this month, DaimlerChrysler agreed to sell either part
or all of its stake in Chrysler?and announced plans to cut
13,000 jobs in three years and reduce its output of Chrysler,
Dodge, and Jeep cars by 10 to 20 percent to rejuvenate its overall
profits.
Ever since DaimlerChrysler was created in November 1998 through
the US$40 billion merger of Daimler-Benz AG and Chrysler
Corporation, Chrysler has become a burden for the group.
Last year, Chrysler posted a loss of US$1.4 billion, offsetting
the US$3.1 billion operating profits posted by Mercedes-Benz and
the strong performance by the truck group. The company is expected
to continue its losses this year and a reshuffle could cost as much
as US$1.3 billion.
Gao Yuan, director of FAW's news center, said it had no plans to
buy Chrysler.
"We don't have the huge amount of money needed to buy Chrysler,"
Gao told China Daily.
Li Liping, an official from the public relations department of
DaimlerChrysler (China) Ltd, refused to comment on the matter.
Currently FAW Group owns three independent sedan companies, FAW
Car Co Ltd, Tianjin FAW Xiali Automobile Co Ltd, and FAW Haima
Automobile Co Ltd. However, it is difficult for these companies to
help FAW to become global.
The company, based in the northeastern city of Changchun, posted
3.5 billion yuan (US$452.2 million)?in 2006 pre-tax profit on
its core-business turnover of 148.7 billion yuan (US$19.2
billion).
Reportedly, early in the 1980s FAW contacted Chrysler about
possible cooperation when the Chinese automaker started to make
sedans, but could not accept the high terms Chrysler asked in the
negotiation.
A Beijing plant owned jointly by DaimlerChrysler and a local
partner is assembling Chrysler's sport utility vehicles and
sedans.
General Motors is reportedly negotiating with DaimlerChrysler to
buy Chrysler. A slew of hedge funds and investment groups have also
shown interest in Chrysler.
Overseas takeover by domestic automakers
On October 28, 2004, Shanghai Auto Industry Group spent US$500
million acquiring a controlling 48.92 percent stake in South Korean
carmaker Ssangyong Motors. This was the largest overseas takeover
by a domestic automaker at that time.
On July 23, 2005, Nanjing Automobile bought MG Rover, the failed
Birmingham carmaker, for more than ￡50 million (US$97.7
million).
(China.org.cn, China Daily?February 28, 2007)