Chang'an takes over five AVIC units

• Source: Global Times
• [08:02 November 11 2009]
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By Chen Xiaomin

The largest State-owned restructuring in the automobile industry was inked Tuesday in Beijing between Aviation Industry Corporation of China (AVIC) and Chang'an Automobile Group, strengthening the latter's footing in the domestic small vehicle market.

AVIC transferred its stakes in five production units to China Ordnance Equipment Group Corporation's wholly owned subsidiary, Chang'an.

Among the five units, Jiangxi Changhe Automobile, Jiangxi Changhe Suzuki and Harbin Hafei Automobile Industry Group are small-sized vehicle and sedan producers. The other two focus on engine production.

It return, AVIC gained a 23 percent stake in Chang'an.

Lang Xuehong, deputy general manager of the automotive department with Sinotrust, said the move would increase Chang'an's share in the domestic small vehicle market.

"Though Chang'an has been exploring the sedan market recently, its core business is still small vehicles. But the car maker's position has been encroached upon by Wuling," Lang told the Global Times.

Before 2005, Chang'an was the largest small vehicle manufacturer. But Wuling quickly caught up and acquired the largest minibus market share in 2008 and the second largest small truck market share.

Lang said the new Chang'an would threaten Wuling's position in the small vehicle market.

Furthermore, adding the five AVIC units will raise Chang'an's production capacity.