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BAIC obtains $2.9b credit line from Bank of China

Updated: 2009-12-05 15:43

Beijing Automotive Industry Holding Corp (BAIC) has obtained a 20 billion yuan ($2.93 billion) line of credit from the Bank of China, the bank said on Friday.

BAIC has said it might still be interested in buying General Motors' Saab unit, after a consortium led by tiny Swedish luxury car maker Koenigsegg, pulled out of talks last week. BAIC was a member of that consortium.

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BAIC declined to comment.

Major Chinese carmakers are hungry for money to upgrade their technologies, expand production scale and eventually tap into the global market, and it is reasonable for Chinese banks to provide them with liquidity.

The credit that BAIC, China's fifth-biggest carmaker, gets is seen enough to boost the production scale of the Beijing-based automaker, which does not even have its own car brand.

Its four-year old Mercedes-Benz car venture with Daimler AG broke even last year and its tie-up with Hyundai Motor Co has a long way to go before catching up with top players in the market such as Volkswagen AG.

"Twenty billion yuan is more than enough for production expansion," said Li Chunbo, an analyst with CITIC Securities.

A day earlier, Chinese car and battery maker BYD Co Ltd received 15 billion yuan in credit from the Bank of China, to expand its investment in battery, new energy and car sectors.

Several Chinese auto companies are keen to break into foreign markets and are aggressively developing their own brands in a bid to move up the value chain from the small, low-priced segment.

Geely, the Chinese carmaker picked as the preferred bidder for Ford Motor's Volvo unit, is said to be seeking at least $1 billion in loans from Chinese banks, including Bank of China, to finance its $1.8 billion bid.