China Watch : SAIC Motor to buy parts and EV businesses for $4.4bn

Automotive News China/Bloomberg, 8 April 2011

SAIC Motor Corp. has agreed to buy auto parts and electric vehicle businesses from its parent, Shanghai Automotive Industry Corp. (SAIC Group), for 28.6 billion yuan ($4.4 billion) to extend its lead as China’s largest automaker.

SAIC Motor, of Shanghai, a partner of Volkswagen AG and General Motors, will issue 1.7 billion shares at 16.5 yuan each in payment for the assets, SAIC said in a statement.

The purchases will boost the company’s electric vehicle business, consolidate its supply chain and develop its services and export operations, SAIC Motor said. The unit of state-owned Shanghai Automotive Industry Corp. is expanding as vehicle sales jumped 32 percent last year in China, the world’s biggest auto market.

Net income more than doubled to 13.7 billion yuan last year from 6.6 billion yuan in 2009, and sales rose 32 percent to 3.6 million vehicles. SAIC predicted its deliveries will rise 12 percent to exceed 4 million units this year. After the share sale, Shanghai Automotive’s stake in SAIC Motor will rise to 77 percent, from almost 73 percent now, according to the statement.

The SAIC Motor purchases include 60 percent of Huayu Automotive Systems Co., a listed auto parts-making unit of Shanghai Automotive, and the 6 percent stake in GM Korea Co. that’s owned by the parent company.

SAIC Motor last bought vehicle-making assets from Shanghai Automotive in 2006 as part of a wider transfer of businesses from Chinese state-controlled companies to listed units. Huayu also bought car-parts operations from the parent in 2008.

[Source: Automotive News China/Bloomberg]

Clive Goldthorp

About the Author:

Clive claims that his interest in the BMC>MG story dates back to his childhood in the 1960s when the family’s garage premises were leased to a tenant with an Austin agency. However, back in the 1920s and 1930s, his grandmother was one of the country’s first female Garage Proprietors so cars probably run in his genes! Admits to affairs with Alfa Romeos, but has more recently owned an 06/06 MG TF 135 and then a 15/64 MG3 Style… Clive, who was AROnline’s News Editor for nearly four years, stood down from that role in order to devote more time to various Motor Racing projects but still contributes articles on as regular basis as his other commitments permit.

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