M&A in auto sector calls for structural adjustment
- Source: Ce.cn
- [10:52 July 30 2009]
- Comments
Using the market mechanism and means of macro-control to promote enterprise merger and reorganization, integrate elemental resources, promote the industrial concentration, and make the optimization and upgrading of auto industry organizational structure come true.
Merger and restructuring is the strategic choice of enterprises after a long-term market research and a rational analysis to future development of enterprises. Insiders reckoned that the important premise of auto companies' merger and restructuring is the complementary advantage and the win-win result, as well as the achievement of 1+1>2.
The most typical example is the cooperation between Shanghai Automobile and Nanjing Automobile. The two companies combine into one through comprehensive cooperation, integrating the resources effectively and cutting down the loss of Nanjing Automobile by 40 percent in 2008.
Lots of auto companies plainly stated that they restructure because they want to be stronger. On May 21, Guangzhou Automobile Group signed cooperation agreement with Hunan Changfeng Automobile Manufacturing Co., Ltd., taking the lead in cross-region reorganization of auto companies after the issuance of Plan on Adjusting and Revitalizing the Auto Industry. Changfeng has extensive experiences in manufacturing SUV, which is just what Guangzhou Automobile lacks.
After the cooperation, Guangzhou Automobile holds 29 percent of Changfeng's gross capital stocks and become the first majority shareholder of Changfeng. Changfeng then changed its name into GAIC-Changfeng. At the same time, Guangzhou Automobile plans to invest a total of RMB 10 billion in the auto industry of Hunan Province in the coming five years and then realize production capacity of 500 thousand.
Some experts hold the view that parts and accessories enterprises have more pressing demand of structuring adjustment in comparison with complete vehicle enterprises. There are two reasons. Firstly, there claims to be tens of thousands of parts and accessories enterprises, in which seven to eight thousand are above designated size. But there are lesser powerful ones and the resources are more disperse.
