China's top industrial planning official said that local auto makers lacked "sufficient capability" for overseas deals, possibly hampering efforts by General Motors Corp and Ford Motor Co to sell brands to Chinese car makers.

Domestic auto makers aren't ready yet "to go overseas and cooperate with big companies," Chen Bin, head of the National Development and Reform Commission's industrial coordination department, said in Beijing yesterday.

"Still, it's up to them to make the decision and once they do, we will support them," he added.

The government's reluctance to back overseas auto deals may hit GM and Ford, which are said to have separately held talks to sell Hummer and Volvo Car Corp to Chinese car makers. The lack of support comes after the collapse of SAIC Motor Corp's South Korean unit and as China draws up plans to restructure the domestic auto industry.

"Chinese auto makers can't cope with consolidating domestic rivals, let alone buying foreign ones," said Zhang Xin, a Guotai Jun'an Securities Co analyst.

The government's reluctance to back overseas auto deals contrasts with the commodities sector, where China will pursue deals "at any cost."

United States auto makers are trying to sell brands to Chinese car makers or other investors as they seek funds to stave off bankruptcy amid plunging demand.

Sichuan Auto Industry Group Co is in talks to buy GM's Hummer sport-utility vehicle unit, Bloomberg News said, and Ford has approached Chinese car makers, including Chery Automobile Co, as it tries to sell Sweden-based Volvo.

Chery Auto, China's largest maker of own-brand cars, said earlier this month that it may consider acquisitions in Europe.

Ssangyong Motor Co went into receivership earlier this month in South Korea after sales had tumbled 30 percent. SAIC Motor, China's largest car manufacturer, owns 51 percent of the company.

(Shanghai Daily February 28, 2009)