China's large carmakers woo small rivals
2009-03-16 Source：internet
Summarize：China's auto makers, often touted as possible buyers of assets from desperate foreign giants, are instead heeding calls from the government to look to their fragmented and over-crowded home turf for ...
China's auto makers, often touted as possible buyers of assets from desperate foreign giants, are instead heeding calls from the government to look to their fragmented and over-crowded home turf for deals.
China has more than 100 automakers who have been dragging their feet for years on combining to forge large, globally competitive groups, due largely to resistance from regional governments that are keen to protect local jobs and tax income.
But, with a push from the central government, they have developed a new sense of urgency as China's once-booming auto market slows sharply and losses pile up at many smaller firms.
"The problem with China is we have too many players fighting each other at the lower end but none has the clout to compete globally," said Guotai Jun'an Securities analyst Zhang Xin.
"There has been a lot of talk - or rather expectations - about Chinese snapping up US auto assets, but the automakers first need to make sure they have the ability to turn those assets around."
Sichuan Auto Industry Group Co, a tiny automaker tucked away in southwest China, denied a media report it was in talks to buy General Motors' Hummer brand for up to $500 million.
"I don't know where this is coming from," an executive at the company, which has barely $150 million in assets, said.
But he acknowledged that Sichuan Auto was recently approached itself by some big State-run domestic firms earmarked to lead a restructuring of the local industry.
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