The Beijing municipal government is to fully support a bid by Beijing Automotive Industry Holding Corp for Ford’s Volvo car unit if the Chinese auto maker fails in its quest for General Motors’ Opel, sources said yesterday.

In a move that surprised some of its domestic peers, Beijing Auto, a second-tier player in China, submitted its final bid for GM’s Opel and Vauxhall brand recently.

A consortium led by Magna International Inc and Belgian investment group RHJ International have also submitted their bids for the GM Europe operation, and the United States auto maker aims to finalize a sale by the end of the third quarter.

Germany’s government yesterday began reviewing the offers for General Motors Co’s Opel unit.

The four German states where Opel has plants have strongly favored the consortium of Canadian auto parts maker Magna International Inc and Russian lender Sberbank, according to Hendrik Hering, Rhineland-Palatinate’s state economy minister. He called for a quick conclusion of talks in view of uncertainty among employees.

“Given the two stronger rival bids and its own limited international exposure, few really believed that Beijing Auto had any chance to win,” a source close to the Chinese company said.

“Still, it might not deter it from a possible bid for Ford’s Volvo car brand as it has the full backing of the Beijing city government which wants a stronger auto industry,” said the source.

Spokesmen from the Chinese auto maker and the Beijing government both declined to comment.

China, which overtook the US as the world’s largest auto market, has been relying heavily on its auto industry to boost the economy, which is targeted to grow by 8 percent this year.

(Shanghai Daily July 23, 2009)

Italian auto maker Fiat reported a second-quarter loss of 168 million euros (US$238 million) yesterday due to a steep decline in sales from a year ago – especially of trucks and commercial vehicles.

The loss compares with a net profit of 604 million euros in the same period last year. It was an improvement, however, from the first-quarter net loss of 578 million euros.

Fiat, which last month took a controlling stake in United States auto maker Chrysler, said incentives for people to scrap old cars and buy new ones in some European countries boosted lagging car sales, narrowing losses compared to the first quarter.

Turin-based Fiat, which makes cars under the Fiat, Lancia and Alfa Romeo brands, said revenues in the quarter were down 22.5 percent, or 13.2 billion euros, compared with 17 billion euros in the same period last year.

“The global economic crisis continued to have a significantly negative impact on demand levels for all the group’s business, but with signs of improvement in certain markets compared with Q1 levels,” Fiat said.

Sales of Iveco trucks suffered especially, sliding 43 percent from a year earlier.

(Shanghai Daily July 23, 2009)

Porsche SE’s controlling families will agree on Thursday to accept an offer by Volkswagen AG to buy its sports car business, Porsche AG, for roughly 8 billion euros (US$11.28 billion), Der Spiegel magazine reported last Saturday.

Germany’s leading weekly magazine wrote that the rival Porsche and Piech clans, which own 100 percent of Porsche SE votes, will approve the two-stage takeover at a supervisory board meeting.

VW would purchase a 49.9 percent stake in Porsche AG and at a later date acquire the rest, in a deal that would create an integrated automotive group with 10 brands under the leadership of the Wolfsburg-based car maker.

The sale would help Porsche SE pay off most of its debt, which two sources said had ballooned to more than 10 billion euros.

Der Spiegel also said embattled Porsche SE and Porsche AG Chief Executive Wendelin Wiedeking are negotiating over a severance package that could total more than 100 million euros. Meanwhile, production chief Michael Macht will replace him as Porsche AG’s head, the magazine said.

Last Thursday, Wiedeking rejected talk he was about to leave the group.

Buyers will be able to purchase Skoda cars without visiting the showroom or leaving home, as the Volkswagen-owned Czech unit becomes the first auto maker in China yesterday to launch online buying services.

Skoda’s new Website, ebuy.skoda.com.cn, will allow potential Skoda consumers to communicate and conduct transactions by simply clicking the mouse.

“The Skoda eBuy site will bring a fresh experience in car sales,” said Wu Jianhua, general manager of Shanghai Bailian (Group) Material Trading Co. “As pace of life quickens, the Internet is becoming dominant with its convenience, high efficiency and is particularly favored by young white-collar workers” who are tech-savvy.

The Skoda eBuy site will allow consumers to complete purchases through a 3D showroom.

It will also help them with individualized orders and price inquiry.

Buyers can also pay a deposit online through eBuy’s strategic partner, Alipay, an online payment arm of Alibaba.

Biggest market

But analysts questioned whether the site would gain widespread acceptance as consumers are usually more cautious when buying big-ticket items online.

China has became Skoda’s biggest overseas market after Germany last year with combined sales of 59,000 units, a surge of 170 percent from a year earlier.

The Czech auto maker owns 200 dealers in 104 cities nationwide.

Individual Skoda dealers must choose to join the new site.

Shanghai Bailian Hubei 4S became the first Skoda eBuy dealer. Wang Shilong, its general manager, said consumers applying for online sales would enjoy priority to buy price-discounted Skoda models.

Fu Qiang, director of the Skoda project at Shanghai Volkswagen Automobile Co, said the first batch of six dealers in Shanghai, Beijing, Hangzhou and Xiamen will launch the online sales. By next year, nearly half of Skoda’s dealers will join the online program.

(Shanghai Daily July 20, 2009)

The report said prices of imported vehicles rose 5.57 percent in the first half.

The report was based on surveys carried out in 36 big and mid-size cities.

It forecast domestic auto prices would remain stable despite slight fluctuations because of a balance in supply and demand.

Auto sales topped 6 million in the first half, up 17.69 percent from the same period last year, according to the China Association of Automobile Manufacturers (CAAM).

China’s government halved the purchase tax on passenger cars to 5 percent for models with engine displacements of less than 1.6 liters and started a rebate program for auto buyers in rural areas early this year.

(Xinhua News Agency July 19, 2009)

Foreign carmakers are rushing to raise vehicle output or open new plants in China as brisk sales and a stronger-than-expected economic recovery in the first half have raised expectations about the world’s biggest auto market.

“The rebound in car sales, which has accelerated in the past few months, is prompting car makers in China to ramp up production again as they have also put in place long-term expansion plans,” said Frank Gong, JP Morgan managing director and China economist.

In the first six months, China sold 4.5 million passenger cars, a 25.6-percent increase from a year ago, as the government’s tax reduction and incentive subsidy for rural residents spurred small car sales.

The better-than-expected sales surge buoyed carmakers’ confidence, after they had curbed production initially due to the sharp economic slowdown late last year.

Vehicle manufacturers also see a bright future in China as the government reported yesterday that the gross domestic product grew 7.1 percent from last year to 13.99 trillion yuan in the first half.

Kevin Wale, president and managing director of GM China, raised his forecast for China’s total auto sales growth rate this year from between 5 and 10 percent he made in April to about 15 percent, after his company posted a 38 percent year-on-year growth in the first half.

GM had earlier said it planned to double its output in China to 2 million units annually over five years.

GM’s German rival Volkswagen AG also confirmed to China Daily that its joint ventures in China would expand production capacity in the second half to meet increasing demand, without divulging details.

“We will optimize the capacity of our plants in Nanjing and Chengdu for the sake of supporting our businesses in new markets,” said the company in an email statement.

China’s privately owned battery and automobile maker BYD Co is planning to raise capital for new projects through issuance of as many as 100 million A shares on the Shenzhen Stock Exchange, Reuters reported yesterday.

The capital raised would be mainly used to fund the company’s lithium-ion battery production, auto research and development, expansion of auto products and parts, as well as a solar battery program, with the rest to be used as working capital, according to BYD.

The Warren Buffett-backed automaker said it would seek shareholders’ approval for the proposed listing through a shareholders meeting in September, Reuters reported, without further details.

BYD had filed for a 58.5-million A shares listing in Shenzhen or Shanghai in January last year but later postponed the issue as the A-share market weakened due to the financial crisis last year.

“BYD wants to be the world leader in the electric car segment, so they need a lot of capital to further develop own technologies and improve capability,” said an auto analyst familiar with BYD’s plans. “And it also needs money to fund its other expansion programs.”

Earlier this week, BYD’s sales manager Wang Jianjun admitted that his company planned to acquire idled Hunan Sanxiang Bus Group, and was considering producing new energy buses, with the first batch of 1,000 units to be delivered to the Shenzhen municipal government.

(China Daily July 17, 2009)

An official from the NRDC confirmed Wednesday that the department had received an application from Tengzhong but did not reveal the department’s stance on the purchase.

Media reports said environmental concerns and issues about how Tengzhong plans to finance the deal were at the top of the NRDC’s agenda. A NRDC source said Tengzhong’s unclear development plan for Hummer had also led to reservations about the bid.

The Ministry of Commerce (MOC), on the other hand, described Tengzhong’s bid for Hummer as a “normal business operation.”

“Chinese enterprises have growing international scope despite the global financial crisis. Sichuan Tengzhong Heavy Industrial Machinery Company’s plan to buy Hummer is a normal business operation,” said Yao Jian, spokesman of the ministry at a news briefing on June 15.

A MOC source said the results of an examination of the bid would be made public at the earliest by end of July.

In response to the NRDC’s capital concerns, Yang Yi, general manager of Tengzhong, said the money would come from the company’s own assets and financial institutions. He said the relevant departments will not make any decision before they have reviewed the company’s plans for energy saving and fuel reduction.

Hummer CEO Jim Taylor said in an interview that Hummer consumes the same amount of fuel as similar vehicles such as Land Rover, and new vehicles using substitute fuels such as diesel and electricity would soon come onto the market. He claimed new technology would enable Hummer to maintain its performance with less weight and reduced oil consumption.

In another development, General Motors Corp confirmed that Chinese auto maker Beijing Automotive Industry Holding Co has joined the bidding for its Opel unit.

Beijing Automotive was reportedly looking to acquire a 51-percent stake in Opel for 660 million euros (US$921 million).

(China.org.cn by Huang Shan, July 16, 2009)

According to the China Association of Automobile Manufacturers (CAAM), Mercedes Benz sold 27,000 vehicles in the first six months on the mainland, up 50 percent over the first half last year.

Sales of Audi rose 28 percent year-on-year to 13,077 last month, making it the firm’s best June in China on record. Audi sold 66,131 units in the first half, up 10.4 percent year on year, taking up 40 percent of the luxury car market.

In June, sales of BMW series and Mini series rose 44 percent to 8,506 units in China compared with the same month last year. The sales of BMW and Mini combined grew 24 percent to 37,627 units in the first half.

China’s overall auto production in June was 1,153,100 units and sales were 1,142,100 units, up 37.73 percent and 36.48 percent respectively over the same period last year.

Dong Yang, administrative vice-chairman of the CAAM, said last week that the association had raised the country’s auto output forecast for 2009 from 10.2 million units to 11 million units.

(Xinhua News Agency July 14, 2009)

Prices of domestic cars saw a month-on-month increase of 0.9 percent last month, while the year on year figure stood at 1.35 percent, said a report released on NDRC’s Web site Friday, based on a survey conducted in 36 large and mid-size cities in China.

Price of imported vehicles rose 1.22 percent from the previous month, with a year-on-year growth of 7.26 percent.

Passenger vehicle prices increased 0.93 percent month on month but dropped 2.77 percent year on year. Commercial vehicle prices maintained a upward trend, rising 0.98 percent month on month and 7.27 percent year on year.

Analysts had contributed the continual rise in auto prices to the increasing demand in the domestic auto market, which was boosted by government stimulus policies.

The surge in demand brought about increasing sales in the first half, said Liu Lixi, auto industry analyst from Northeast Securities.

China halved the purchase tax on passenger cars to 5 percent for models with engine displacements of less than 1.6 liters and started a rebate program for auto buyers in the rural area early this year.

The country’s auto sales topped 1.14 million units in June, up 36.48 percent over the figure a year earlier, the fourth month in a row surpassing the 1.1 million units mark, according to the China Association of Automobile Manufacturers (CAAM).

The government stimulus plan for the automobile industry would maintain the balance between supply and demand in the auto market, therefore auto prices would maintain steady with little fluctuation in the second half of the year, the NDRC report predicted.

China unveiled a 4-trillion-yuan (585 billion U.S. dollars) stimulus package last November and 10 specific industry stimulus plans for autos, iron and steel, petrochemicals and other sectors this year to shore up the Chinese economy.

(Xinhua News Agency July 12, 2009)