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General Motors' (GM) joint venture in China has been taken to court by a Beijing-based car chain for alleged trouble fixing license plates to cars.
Beijing Yafun Automobiles Chain Store Co Ltd has filed a lawsuit against both SGM (Shenyang) Beisheng Automobile Co Ltd, the venture of GM, the second defendant, and China National Arts & Crafts Corp (CNACC), a State-owned trader, the first defendant.
The case is taking place at the Beijing No 1 Intermediate People's Court.
Li Shanghai, Yafun's attorney, raised queries about 200 Chevrolet Blazer sport utility vehicles (SUVs), produced by Jinbei GM Automobile Co Ltd, Beisheng's predecessor. The attorney accused Beisheng and CNACC of not informing the plaintiff that the height and width of the SUVs did not measure up to regulators' standards, and they could not therefore have license plates attached to them.
Yafun has requested compensation of 50.51 million yuan (US$6.24 million) and asked that 102 Chevrolet SUVs be returned to CNACC and Beisheng, Li said.
In March 2003, Yafun clinched a deal with CNACC and Jinbei GM to buy 200 Chevrolets for 255,000 yuan (US$31,500) per car with CNACC as the broker and Jinbei GM only keeping responsibility for vehicle quality and after-sales services.
However, Yafun had problems selling the vehicles because of the license plate issue, which resulted in huge financial losses and a damaged reputation for Yafun, Li claimed.
Yafun sold 98 Chevrolets, at lower prices than the per unit purchase price to customers, claiming they could "find ways themselves" to obtain licence plates, he said.
Jinbei GM, formed in 1998, stopped producing Chevrolet Blazers in early 2004 due to sluggish sales and was renamed Beisheng in August 2004 according to a restructuring plan.
Beisheng is now an affiliate of Shanghai GM, GM's joint venture with Shanghai Automotive Industry Corp, and currently produces Buick vans.
An official from Shanghai GM told China Daily Beisheng was not accountable for ensuring that the Chevrolet vehicles in question obtained license plates because it was only responsible for vehicle quality and after-sales services according to the deal in 2003.
CNACC was unavailable for comment yesterday.
However, according to information provided by Yafun, CNACC has defended itself by saying that since Yafun now owns the vehicles they should take responsibility for the problem.
Yafun now has more than 800 vehicle chain stores across China. It aims to sell 480,000 new and used vehicles with a revenue of 65 billion yuan (US$8 billion) this year, according to its website.
(China Daily December 9, 2005)
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