The Chinese government had announced earlier this year that it wants to “encourage” its more than 100 automakers (nobody is quite sure how many there really are) to consolidate. The goal: Make China’s industry more competitive with foreign rivals. Beijing wants to see four big ones and four smaller ones. Unsaid: the remaining 90-odd carmakers should look for other employment.
To lead by example, the Chinese government just initiated one of the largest merger deals in the Chinese auto industry. Easy for them to do: The government owns both companies.
Changan Automobile Group Co., a Chinese auto maker belonging to the China Ordnance Equipment Group Corporation (COEGC), agreed to take over auto operations of Aviation Industry Corp of China (AVIC) to form what might be the third largest Chinese automaker after SAIC and FAW, Xinhua reports.
Changan receives from AVIC Harbin Hafei Automobile Industry Group, Changhe Automobile, Dongan Power, Changhe Suzuki and Dongan Mitsubishi.
Both Changan and AVIC are both former military enterprises, owned by the Chinese government.
AVIC is to focus on its core business, namely airplanes. AVIC makes everything from commercial airplanes to bombers, fighters, and helicopters. AVIC entered a joint venture with Airbus to make parts and components for the A350 wide-body aircraft.
Changan is the Chinese joint venture partner of Ford and Mazda. Its total sales for the first ten months grew 57 percent to 1.1m units. The restructuring will boost Changan Auto Group’s annual auto production capacity to nearly 2 million units. The restructured group aims to sell more than 2.6m vehicles by 2012, and 5m units by 2020, says Gasgoo.