BAIC builds subsidiary for own brand name cars

By Yu Qiao (China Daily)
Updated: 2010-10-11 14:31
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BAIC builds subsidiary for own brand name cars

BAIC's first car model under the reborn Beijing brand will roll off the assembly line later this year and go on sale in 2011.[Photo/China Daily]

Company expects increase in sales revenue and production

BEIJING - BAIC Group, the Chinese partner of Daimler AG and Hyundai Motor Corp, recently opened a shareholding arm in a crucial move to achieve a stock listing in its entirety and boost its own brand name passenger car business.

The Beijing-based company, China's fifth-biggest auto group, controls a 51 percent stake in the shareholding subsidiary BAIC Motor Co Ltd, and has more than 10 billion yuan ($1.49 billion) in net assets and 5 billion yuan in registered capital.

Shougang Group, one of China's top steel makers based in Beijing, holds an 18.31 percent stake in BAIC Motor as the second-biggest shareholder.

BAIC Motor's assets include BAIC Group's 50 percent stake in a joint venture with Hyundai, its own-brand business unit, its automotive research institute and its new-energy and power train units.

The group's 50 percent stake in a tie-up with Daimler AG and major spare parts assets will also be injected into BAIC Motor afterwards.

Sources from BAIC Group said BAIC Motor is expected to launch an initial public offering in around two years. The company has not revealed the listing venue or how much will be raised.

Some of China's major automotive groups - SAIC Motor Co Ltd, Dongfeng Motor Group Co Ltd and Guangzhou Automobile Group Co Ltd - have achieved stock listings in their entirety. FAW Group is also preparing for an entire listing.

Passenger vehicles

BAIC Motor is to put most of the money raised from the stock market into its own-brand passenger vehicle business.

The first passenger car model under the reborn brand of Beijing will roll off the assembly line later this year and will be put on sale in 2011, the company said. The Beijing brand was born in 1958, but abandoned soon afterwards.

The company plans to roll out more than 20 all-new passenger models and variants based on acquired Swedish Saab models within the next five years.

The parent BAIC Group bought Saab 9-3 and 9-5 models as well as its engine technologies for $200 million at the end of last year. But the deal didn't include the Saab brand.

BAIC Motor's own-brand passenger vehicle line-up will include subcompact, compact, mid-sized and large-sized sedans, sport utility vehicles and crossovers.

It aims to sell 700,000 units of its own-brand passenger vehicles a year by 2015, when its overall passenger vehicle sales hit 1.8 million units.

It plans to sell 100,000 passenger vehicles next year.

Complete lineup

The company's joint venture with Hyundai is making a slew of Hyundai brand passenger cars, such as the Sonata, Elantra, iX35 and Tucson. Its tie-up with Daimler AG is assembling the Mercedes-Benz E-Class and C-Class cars.

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BAIC Motor will also put its new-energy passenger vehicles under its own brands. Its planned new-energy lineup will include purely electric cars, petrol-electric hybrid cars and vehicles powered by other alternative fuels.

The company plans to begin small-volume commercial production of new-energy cars later this year. It expects to produce 150,000 units of new-energy vehicles a year by 2015.

New-energy vehicles are seen as a business bonanza by domestic and foreign automakers in the Chinese market for environment and oil shortage reasons.

BAIC Group also has a listed company, the Foton, to produce commercial vehicles.

The group estimated that its overall vehicle sales would reach 1.4 to 1.5 million units this year, up from 1.24 million units in 2009.

Its sales revenues are expected to hit as much as 150 billion yuan this year, up from 116.6 billion yuan last year.

China's fast-growing vehicle market is expected to rise to 17 million units this year, up from 14.7 million units in 2009, according to the China Association of Automobile Manufacturers.