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July 30, 2009

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Home » Business » Auto

Car maker dismisses rumors of a merger

ANHUI Jianghuai Automobile Co, a mid-sized Chinese auto maker, yesterday put an end to growing speculation that it might merge with Chery Automobile Co.

Jianghuai Auto said the state-owned assets management commission in Anhui Province had not started any study of a possible merger between its parent, Jianghuai Auto Group, and Chery, according to its statement filed to the Shanghai Stock Exchange.

"There is no plan for any restructuring with Chery within the next three months as well as other equity transfer and new share sale plans," it said.

Suggestions of an alliance between Chery and Jianghuai Auto began at the beginning of this year after the central government issued plans to form larger national companies to reduce oversupply and boost competition.

In May, the government in eastern China's Anhui also announced a similar reform and stimulus plan, encouraging six of its car makers, including Chery, Jianghuai Auto, Hualing and Changhe, to consolidate.

As both Jianghuai Auto and Chery are headquartered in Anhui and owned by the government, the plan fueled speculation that it was likely the two car makers would get together.

Jianghuai Auto said in the statement that the local government plan called on car makers to restructure in accordance with market requirements and it didn't refer to any specific car makers.

Any merger of the two companies was also denied by Chery spokesman Jin Yibo.

Industrial analysts said Chery and Jianghuai were in good financial shape and preferred to develop independently.

China wants to cut the number of its mainstream auto groups to 10 or fewer from the existing 14 and also hopes to create two or three mega-producers with an annual output of more than 2 million vehicles each.

In May, the Guangzhou Automobile Group Co, the Chinese partner of Toyota Motor Corp and Honda Motor Corp, merged with a smaller sport-utility vehicle maker Hunan Changfeng Motor Co in central China.

Sales of Jianghuai rose by 18 percent to 152,009 units in the first half of this year, and sales for passenger cars more than tripled. Chery sold 211,224 vehicles in the same period, making it the seventh-largest car maker in China.


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