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Geely buys bankrupt Aussie supplier

GEELY Automobile Holdings announced yesterday it had agreed to buy the bankrupt Australia auto parts supplier Drivetrain System International (DSI), becoming the first Chinese auto maker to make an overseas acquisition during the financial crisis.

Zhejiang Province-based Geely said the purchase would allow it to improve production and engineering capabilities for its own automatic transmissions, according to its statement. No financial details were offered.

DSI, a supplier to the Ford Motor Corp, Chrysler and South Korea's Ssangyong Motor Corp, mostly produces four-speed and six-speed automatic transmissions with an annual output of 180,000 units.

But the company filed for bankruptcy in middle of February after the global financial crisis hit some of its clients, Geely added.

Geely said it plans to introduce DSI's products to Chinese auto makers and help it find low-cost Chinese suppliers to revive the company.

It would also offer financial assistance to DSI to develop new products and keep its leading position in the global market.

DSI is also developing the eight-speed AT, duel-clutch transmission and CVT transmission.

"DSI's bankruptcy proceedings enabled Geely to get valuable assets at a lower cost," said Xia Ping, an analyst from Core Pacific Yamaichi International (HK) Ltd.

"The core spare parts would also be helpful as it wants to expand to upper markets for higher profitability," she added.

Geely is one of the Chinese car makers that have considered the acquisition of struggling overseas counterparts during the global financial crisis as they strive to secure advanced technologies and access to new markets.

The car maker was earlier reported to be in initial talks with Ford to buy its Volvo division. But the company later denied this.

Other Chinese car makers showing an interest in Volvo included Chery Automobile Co Ltd and Dongfeng Motor Corp.

Overseas purchasing has drawn warnings from the state government which said Chinese auto firms still lack experience in running international brands and also lack capital.

Geely has been developing high-end models and seeking opportunities to expand overseas markets as the domestic market competition intensifies.

It is working on high efficient transmission and green technology to meet higher safety and emission standards in the US market after exporting to Russia and the Middle East.

It aims to boost sales by 25 percent to 250,000 cars this year, according to Li Shufu, chairman of Geely. It aims to sell 2 million vehicles by 2015 with two-thirds of the products sold overseas.


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