Business

“General Motors will go bankrupt in the next 10 to 20 years and the US market will become a desert for the automotive industry.” This unlikely prediction was made by Li Shufu, chairman of Geely Automobile Holdings, back in 2001 during a heated automotive forum in Beijing.

At the time, Li’s words infuriated representatives of both GM and Ford, a number of whom stormed out of the meeting in protest. Just how seriously Li, himself, took his off-the-wall prediction at the time will, perhaps, never be known, however, its accuracy, eight years later, is now beyond dispute.

On June 1, the humiliated US automaker finally filed for Chapter 11 bankruptcy protection to the US government. This historic move made it the largest ever US industrial company to file for bankruptcy and the fourth largest US company overall to make such a move – behind only Worldcom, Washington Mutual and Lehman Brothers.

The company’s fall from grace is made all the more spectacular by looking back at its years of almost unparalleled success in the automotive sector. The company was the global sales leader in the sector in for the 77 years from 1931 to 2007.

General Motors manufactured cars and trucks in 34 countries, employed 244,500 people around the world, as well as selling and servicing vehicles in some 140 countries.

Latterly, though, the collapse of the ever-biggest automaker had become to seem inevitable. Zhang Xin, an auto industry analyst with Guotai Jun’an Securities Co in Beijing, represents the views of many: “Even if there was no financial crisis, GM would still have folded. It had simply amassed too many problems during its long history.

“By the time the company woke up to the reality of the problems it was facing, it was far too late for them to be addressed. The successes and failures of GM, however, should be an object lesson for many in China’s domestic automotive industry, especially for those in the independent sector.”

Irrational expansion

Zeng Zhiling, a senior analyst with Global Insight Inc in Shanghai, blames an irrational and unfettered impulse to expand and acquire as the source of many of GM’s woes: “GM’s voracious appetite for acquisitions and mergers and its investment in new brands made the company a hugely bloated business, but, whilst it looked big, it was actually far from strong.”

During the course of 2008, GM sold 8.35 million cars and trucks globally under its 12 brands of Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Opel, Vauxhall, Holden, Pontiac, Saab, Saturn and Hummer. However, its core assets focused on only four brands – Buick, Cadillac, Chevrolet, GMC. It is these four key assets that it has sought to maintain in its bankruptcy protection filing.

Although it has now reached agreements to sell Saab, Opel and Hummer separately, the prices of the deals has nosedived. The subsequent shortfall in profits, then, is the inevitable outcome of the company’s irrational acquisition policy.

Zeng says: “Chinese automakers, with just a decade of trading under their belts, should learn from this and focus on strengthening their own capabilities and optimizing their production structures, rather than rushing into expansion through ill-thought-out acquisitions, especially those involving overseas companies.”

A case in point is the recent move by the Sichuan Tengzhong Heavy Industrial Machinery Co Ltd, a small-scale industrial company with no experience in the automotive industry, who have put in a bid to acquire GM’s premium off-road brand, Hummer. The proposed deal has already been dogged by speculation that it will be vetoed on environmental grounds and because the purchaser lacks the experience to manage the US-based business.

Commenting in the likely collapse of the deal, Zeng said “Domestic automakers should be very cautious when it comes to mergers and acquisitions. The two sides need to have similar corporate cultures and the same long-term development priorities.”

Zhang Zhiyong, the chief auto analyst with SDR Consulting Group, is even more scathing when it come to the current advisability of acquisitions: “The multi-brand strategy makes it easy to confuse a company’s overall brand positioning. It also reduces management efficiency as senior staff are obliged to divide their attention, time, and resources across a number of different brands.

“Currently local automakers are tempted by the multi-brands strategy as way to access more market segment. I hope that many of them will learn from GM’s failure to make a success of the strategy.”

Zhong Zhi, a Beijing-based independent auto analyst, believes Chinese automotive companies are better looking to their Asian neighbors for inspiration rather than to the US: “Chinese homegrown auto producers should learn from Toyota in Japan. They focus exclusively on producing small and economic cars, all under their own brand.”

Oil consumption

Statistics show that 20 percent of the world’s carbon dioxide emissions are created by the automobile industry – of which US vehicles contribute some 45 percent. Remarkably, GM vehicles alone account for 31 percent of the total US auto carbon dioxide emissions.

Zhong says: “GM traditionally focuses on large, gas-guzzling cars, even though consumers have now changed their preference and are increasingly looking for economic, more environmentally friendly vehicles.”

Early in 1978, with the advent of the second global oil crisis, GM’s rivals in Japan, South Korea and Germany began to shift their focus toward developing smaller, more oil-efficient cars as a response to the challenges of the energy crisis.

However, GM maintained and even expanded its output of fuel-heavy pick-ups and SUVs. With increased competition from more eco-friendly Japanese and Korean imports, GM’s US market share fell from 50 percent to its current low of 20 percent.

Somewhat belatedly, in the late 1990s, GM invested $1 billion in the production of an electric car, the EV1. Despite its popularity in its domestic market, GM pulled the plug on its production in 2000 and it had all but disappeared from US roads by 2004.

Meanwhile, its Japanese rival, Toyota, persisted with the development of its hybrid vehicle, the Prius. It is no coincidence that, in 2008, Toyota finally overtook GM to become the world’s largest automobile manufacturer. Looking back, GM’s ex-CEO, Rick Wagoner, once admitted that abandoning the EV1 was his biggest regret.

Zhong would agree, seeing GM’s fate as inevitably tied in with its inability to match the changed mood of its one-time customers: “Along with increasing oil prices, Chinese consumers pay more and more attention to energy efficiency when they are thinking about buying cars. However, despite this, some homegrown automakers are now developing larger and more luxurious cars, even though smaller and more economic cars are clearly the future of China’s auto industry.”

Currently, two third of China’s refined oil supply is consumed by the automobile industry, a fact that is leading manufacturers to re-assess their future production priorities.

Li Anding, a senior auto commentator with Xinhua News Agency, says: “Chinese automakers need to pay attention to the research and development of new energy sources and new technologies. This will require a huge long-term investment.

“They should learn from Volkswagen and Fiat, companies which now have a distinct focus on the development of practical and feasible green energy solutions, including economic engines, clean diesel, and a dual-clutch gearbox, a low-cost route to cutting a vehicle’s oil consumption with not so high cost. There is no need to waste millions or billions of yuan on the development of unpractical technologies with an unclear future.”

Such concerns will be paramount among many Chinese automotive companies at a time when the country’s industry is already facing a period of change. The Chinese government announced in its auto industry restructuring plan earlier this year that it intends to cut the number of major Chinese auto groups to just ten or less from its current level of 14.

It also wants to see the emergence of two or three mega-manufacturers, with annual outputs of more than 2 million vehicles apiece. Last year the top performer was SAIC, which produced 1.7 million vehicles.

(China Daily June 29, 2009)

A Chinese company’s bold bid for General Motors Corp’s Hummer brand has brought few accolades – instead more expression of doubt and dispute.

Sichuan Tengzhong Heavy Industrial Machinery Co Ltd, a small and before-obscure local company with no background in automobile manufacturing, said it will be the owner of the world’s most celebrated off-road vehicle brand Hummer.

It signed a Memorandum of Understanding with GM, parent of Hummer, on June 2 to acquire the rights to the Hummer brand along with the senior management and operational team, just one day after the US auto giant filed for bankruptcy protection.

However, a China National Radio report from Sichuan on Friday said that the National Development and Reform Commission, China’s top industry watchdog, would possibly derail the deal because it clearly broke government guidelines.

The report said that Tengzhong lacked auto industry expertise and the oil-guzzling Hummer vehicles did not follow China’s energy-saving policy.

Tengzhong’s bid staggered the imagination of many – a Chengdu-based privately owned industrial machinery group only four years old taking over the gas-guzzler, which was put on the sales block a year before GM’s then-CEO Rick Wagoner.

According to Hummer CEO Jim Taylor, both sides are currently enjoying “honeymoon”, with the actual transaction expected to close in the third quarter, subject to customary closing conditions and regulatory approvals.

Both sides decline to disclose the value of the deal, but foreign media have variously reported the estimated price at $100 million and $500 million.

Hummer will maintain its headquarters and operations in the US, and will continue to be managed by its existing leadership team. The team intends to expand Hummer’s dealer network worldwide, particularly into new and underserved markets such as China.

Suspicions

After a short period of excitement and pride that a premium automotive brand will be owned by a Chinese company, the deal soon aroused suspicion.

The biggest question is how Tengzhong, a local company established in 2005 with registered capital of just 300 million yuan, can take over international brand Hummer with price tag 10 times that.

As well, the transaction if successful will secure more than 3,000 high-paying jobs in the US and require Hummer to embark on a more aggressive campaign of global expansion.

With a US autoworker salary package averaging about $70 an hour, Tengzhong will need pay more than $400 million to US employees each year.

Tengzhong has refused to reveal any information about its source of capital or the real dealmaker. Its CEO Yang Yi continues to repeat that “we are capable of achieving the final deal”.

“The public should not judge a private company’s financial capability from its registered capital,” Yang said. “We have the resources for the Hummer deal from our own capital and also funding from financial institutions.”

Chinese media report that Suolang Duoji, who also has the name Li Yan, who partly owns the parent company of Tengzhong, put his own money into the Hummer deal.

His plastic manufacturing company Lumena Resources was listed in Hong Kong on June 16, which boosted Li’s wealth by HK$315 million ($40.6 million).

Management integration and culture clash are also worries for the Tengzhong-Hummer marriage.

Financial commentator Ye Tan described it as “an unpromising deal”.

“There are few successful cases of this kind in cross-industry mergers owing to different practices, experience and cultural backgrounds. I am not optimistic on the deal’s future also because Tengzhong has no overseas market experience,” she says.

Garry Wang, China M

A key government agency is inclined to reject Sichuan Tengzhong Heavy Industrial Machinery’s controversial bid to buy the Hummer brand from bankrupt US car giant General Motors, China National Radio (CNR) reported Thursday.

The National Development and Reform Commission (NDRC), the nation’s top economic planning body, may reject the deal on the grounds that Tengzhong lacks the expertise and resources to run Hummer’s operations, and that the gas-guzzling brand does not fit in with the country’s energy-saving policy, CNR reported, without citing sources.

The NDRC is a key government body in approving the Chinese company’s overseas acquisition deal.

Only the Ministry of Commerce, which together with the State Administration of Foreign Exchange is also involved in approving such overseas acquisition deals, has made public comments about the deal.

Tengzhong’s bid is “rational and normal” given the current global financial crisis, Yao Jian, a spokesman for the Ministry of Commerce, said last week.

But Yao said his ministry had not yet received any application from relevant parties.

Sichuan Tengzhong Heavy Industrial Machinery, a special-use vehicles and highway components maker, announced its intention to buy the Hummer brand early this month, immediately drawing public ire.

“Buying a fuel-hungry and high-emission brand is directly against the current trend of energy saving and emission reduction,” said Lu Zhongyuan, deputy director at the Development Research Center of the State Council, the country’s cabinet, at a forum earlier this month.

But the little-known Tengzhong has repeatedly said that it has the financial resources and expertise to clinch the deal.

“We have the financial resources for the Hummer deal from our own sources and also funding from some financial institutions,” its general manager Yang Yi said last week.

Both GM and Tengzhong have refused to disclose the financial terms of the deal, which has not been formally signed yet.

Analysts have estimated the deal size at between US$100 million and US$500 million.

Chinese website Sina.com reported yesterday that the two sides were planning to formally sign the deal on June 28, citing unnamed sources.

But a person with knowledge of the matter yesterday denied the same to China Daily saying, “such talk is groundless rumor”.

The government is encouraging domestic firms to go abroad, while also stepping up its regulation of overseas acquisitions after some recent deals incurred losses.

Last week, the NDRC issued a notice requiring Chinese companies to report intended overseas acquisitions to the government before they sign any legally binding contracts.

(China Daily June 26, 2009)

While BMW is likely to walk away empty-handed from China’s lucrative government car procurement market this year, its German peer Audi has been dominating the market for a long time.

The Procurement Center of the Central People’s Government (PCCG) said last Thursday that it has no plan to buy BMW cars this year.

In contrast, government procurement contributes about 20 percent to Audi’s total sales in China, according to Zhang Xiaojun, deputy managing director of Audi China’s Sales Division.

In 2008, Audi sold 119,598 sedans in China, a 17 percent increase year-on-year. China is now Audi’s second biggest market in the world, only behind Germany.

The money Audi has made from Chinese government procurements and its avoidance of major public controversies should be the envy of other German luxury car competitors.

The image of an “official car” has helped Audi beat BMW and Mercedes-Benz, two other German brands which are also eligible for government procurement in China, the only market where Audi leads in luxury sedan sales.

“Government procurement has a direct influence over vehicle consumption of ordinary people. If a customer sees a model that is the same as the governor’s, he will probably take it into first consideration. That’s a big reason why foreign automakers pay so much attention to government market,” said Hu Xiaowu, professor, School of Social and Behavioral Sciences, Nanjing University.

Compared to Malaysia, India, Japan and other countries that strictly require officials to use homemade cars, it is common for Chinese officials to favor foreign luxury cars.

“The higher the level of government, the higher the request for luxury. If the price of two cars is the same, officials always prefer the foreign brand,” said Chen Min from Geely, a domestic automaker in China. Chen is responsible for government procurement of the company.

In 2005, Audi launched a new, prolonged sedan model A6L in China and it is now the most popular model among Chinese officials.

BMW got enrolled by PCCG only now.

“BMW cars have been involved in several traffic accidents in recent years and its reputation is not good among ordinary Chinese people. Besides, the central government calls for priority to domestic brands in the 4-trillion-yuan stimulus package. The news thus raises public dissatisfaction,” said Hu.

Absence of domestic competitors is also a reason for the success of foreign automakers like Audi in Chinese government procurement market.

According to the standard set in 1999, sedans for officials at the minister and province governor level should be within 450,000 yuan with engine size less than 3.0 liter; vice-minister and vice-governor level within 350,000 yuan less than 3.0 liter; officials at other levels within 250,000 yuan less than 2.0 liter.

The price of Audi A6 and A6L sedans is around 300,000 to 700,000 yuan with engine size around 2.0 and 3.0 liter, which mostly covers the price and engine limit, while the highest price of domestic cars like Geely and Chery is about 100,000 yuan with engine size around 1.6 liter, much lower than the lowest limit.

“Our products are not high-end enough, which restricts the level of our target market. Our products can only sell to low level government officials at present,” Chen said.

According to Chen, although vehicles of Geely were enrolled by PCCG in 2008, not a single car has been sold to the central government till now.

(China Daily June 25, 2009)

Toyota shareholders approved the appointment of the company founder’s grandson, Akio Toyoda, as the firm’s new president yesterday, hoping that reaching back to the auto maker’s family roots would help steer the manufacturer out of its worst ever crisis.

More than 3,300 shareholders packing a hall at Toyota Motor Corp headquarters – a record attendance – showed their approval by applause for the selection of 29 new directors, mostly company executives and directors, including Toyoda.

Toyoda faces the daunting task of reviving the world’s largest auto maker, which lost 436.9 billion yen (US$4.6 billion) during the fiscal year through March, its worst loss since it was founded in 1937. The company expects an even larger loss this year.

Toyoda, 53, formally became president at a directors’ meeting later in the day. He replaces Katsuaki Watanabe, who presided over the shareholders’ meeting in the central Japanese city that shares its name with the corporation. Reporters saw the proceedings live on a TV monitor at Toyota headquarters.

Worries over delays

Toyoda, the grandson of founder Kiichiro Toyoda and the son of Shoichiro Toyoda, a former president, spoke only once in the meeting, in his role as executive vice president overseeing Japan sales. The founder’s family name is spelled with a “d,” but the company name was changed to Toyota because that was considered luckier.

He responded to the worries of a shareholder about the delay in Prius hybrid deliveries because production hasn’t kept up with booming demand, with deliveries not arriving until about November.

“We are very sorry to make customers wait,” he told shareholders, standing at the corner of the stage with other executives. He assured shareholders everything was being done to boost production.

Many Japanese companies, including conservative ones such as Toyota, don’t allow incoming chief executives to speak up too much until they officially assume their new position.

Watanabe, the outgoing president, who remains on the board as vice chairman, did almost all the talking at the two-hour shareholders’ meeting. Watanabe had led Toyota since 2005 on an aggressive – and until recently a largely successful – growth track.

The company has been hit hard by the global slump, particularly in the United States, Europe and its home market of Japan.

Watanabe apologized for Toyota’s recent losses, and said directors would forego bonuses.

Hopes were high among shareholders for leadership from a Toyoda – a name that holds a mystique in this city that depends on the company and its related businesses for thousands of jobs.

“He can bring people together,” said stockholder Yuzo Watanabe, 59, who works for an auto parts maker and owns 1,000 Toyota shares.

In a news conference in January when his appointment was first announced, Toyoda promised a back-to-basics approach, valuing rank-and-file and consumer needs. He has another news conference set for tomorrow in Tokyo.

(Shanghai Daily June 24, 2009)

Hummer already has expertise and experience – all it needs is cash.

That was the message from CEO Jim Taylor this week as he mapped out a bright, green future under Chinese ownership.

Negotiations are under way between General Motors (GM) and Sichuan Tengzhong Heavy Industrial Machinery over the proposed purchase of the luxury car brand.

Taylor expects the deal to be done by the end of the third quarter and, although he refused to discuss the amount of money involved, he told China Daily that cash-strapped GM Corp had set financial clout as the main criteria for bidders.

“All I need is cash,” he said. “We were looking for companies with the resources to fund our future development and keep the brand and dealers alive. I’ll bring all (the experience and expertise) to the table.”

If sold to Tengzhong, the brand will belong to a foreign company with no background in car manufacturing. But Taylor said the Chinese firm was happy to simply pay the bills and leave the vehicle-end of operations to Hummer’s existing management, engineering, marketing and advertising teams.

The deal is a perfect fit, he said: Tengzhong will get an auto business and GM will get the brand off its books.

Whether the product is what China needs is subject to heated debate, with many analysts predicting Hummer will never return to the glory days of the early 2000s.

Hummers are high-end, rugged sport utility vehicles that have become symbols of opulence among the rich and famous. GM’s decision to sell the brand came after a sharp fall in car sales during the recession. During the first quarter of this year, worldwide sales of GM vehicles dropped 28 percent to 1.6 million, the firm said, with Hummer sales plunging 62 percent to just 5,013.

The auto giant bought the Hummer brand in 1999, when the dot-com economy was still booming and gas prices were under $2 a gallon. Fans at the time included movie star-turned-Governor of California Arnold Schwarzenegger, who was reported to have once owned as many as seven.

Soon after, GM began offering scaled-down models to boost its customer base, with these snapped up by celebrities such as socialite Paris Hilton, basketball star Shaquille O’Neal, Playboy magazine founder Hugh Hefner, England soccer star David Beckham and former world heavyweight boxing champion Mike Tyson.

A spike in fuel prices and increasing fears over the environmental impact of GM’s other SUV models have since dented the brand, while the stringent new fuel economy standards US carmakers will have to meet in the coming years is also expected to pose a challenge.

Meanwhile, many countries have mandated their own fuel economy standards. But Taylor said more environmental awareness in the automotive industry was a positive thing and vowed Hummer would be reborn with new eco-friendly, smaller and fuel-efficient models rolling off the production line.

“The Hummer of tomorrow is not as the same as the Hummer of today,” he said. “It has to be more fuel efficient, it is a must, and with an (new) investor we are going to change the image of Hummer.”

That will not be an easy task, with Hummers widely regarded as gas-guzzling, road-hogging, oversized machines rich people buy to flaunt their wealth.

For the time being, production of the H2 and H3 models has been halted, while the more compact H3 will be made alongside the Chevy Colorado and other pickup vehicles at the GM plant in Shreveport, Louisiana, until the end of 2010. At that time, Hummer can stay, leave or buy the plant.

In his first public statement, Yang Yi, CEO of Sichuan Tengzhong Heavy Industrial Machinery, said his firm “will invest in the Hummer brand and its research and development capabilities, which will allow Hummer to better meet demand for new products such as more fuel-efficient vehicles in the US”.

Tengzhong has repeatedly insisted it has the financial resources to strike a deal and Yang said: “The public should not judge a private company’s financial capability from its registered capital. We have the resources for the Hummer deal from our own capital and also funding from some financial institutions.”

That position may be further boosted as Suolang Duoji, who it was said could put his own money towards the Hummer deal, saw his wealth increase by HK$315 million ($40.6 million) after chemicals manufacturer Lumena Resources, of which he is chairman, launched its IPO in Hong Kong on Tuesday.

The new owners may also find a niche market in another part of the world, such as the Middle East, or devise a way to retool the brand to be more affordable and fuel efficient.

Any such efforts would be costly, however, while a more eco-friendly Hummer would be a tough nut to crack, especially since the brand’s fans will likely expect future models to uphold its rough-and-tumble nature.

While GM’s desire to offload Hummer is obvious, Tengzhong’s interest in buying it remains a mystery.

Analysts say the purchase will help the four-year-old company boost its image in China and abroad, but earlier acquisitions of foreign automakers by Chinese firms have so far not ended well.

In 2004, Shanghai Automotive Industry Corp paid $500 million for a 49-percent stake in South Korea’s Ssangyong Motors. The latter went bankrupt in January.

Even though GM has no authorized Hummer dealership in China, 700 to 800 vehicles have been sold in the country, said Taylor, who is confident of a bigger consumer base for Hummer when Tengzhong takes on the brand.

If Tengzhong moves the Hummer lines to China, it will find it difficult to get the vehicles onto United States soil, though. When GM announced plans to sell 17,300 China-made cars in the US in 2011 and 51,500 units by the year 2014, it received a backlash from the US Congress and United Auto Workers union.

(China Daily June 19, 2009)

Automaker FAW Group of Changchun in Jilin province is said to be in merger talks with Liaoning’s Brilliance China Automotive Holdings Limited, which could lead to FAW acquiring the smaller Brilliance and its three listed subsidiaries.

The acquisition, if it goes through, will catapult FAW to be China’s largest automobile producer, overtaking the Shanghai Automotive Industry Corporation. FAW’s output in 2008 totaled 1.5 million units. The company said earlier that it has set a sales target of 3 million units for 2012.

Tian Hongfu, deputy director with the company’s planning department, said that the situation is still unclear and declined to comment further.

Industry experts said Brilliance’s production capacity reached 800,000, which made it an ideal target for FAW to expand business.

Rapid expansion has strained Brilliance’ financial resources. The company was further hit by slow sales in 2008 when the company sold a total of 285,000 units, which was less than 40 percent of its total production capacity.

In April, Brilliance Auto chairman Qi Yumin said in the Shanghai auto expo that he would not exclude any reforming proposal, “as long as it can benefit the development of the brand”.

Brilliance is owned by the Liaoning provincial government. The company has invested in about 100 companies, with total assets amounting to 30 billion yuan.

(China Daily June 18, 2009)

Geely Automobile Holdings has reached a preliminary agreement with Ford Motor Co to purchase its Volvo unit and plans to produce a new Volvo model in Guangzhou Province, according to media reports Wednesday.

The Geely acquisition, following that of another firm’s earlier bid to purchase a foreign brand, is yet another opportunity for domestic car makers to expand into the global market.

China’s Sichuan Tengzhong Heavy Industrial Machinery Co announced recently it was to acquire General Motors Corp’s Hummer brand.

Zhejiang Province-based Geely aims to purchase Volvo and build a production line for the Volvo XC90 in Guangzhou Province’s Dongguan City, the National Business Daily reported yesterday.

“It’s the right time for Chinese firms to make overseas acquisition during the slowdown in the economy,” said Jia Xinguang, chief analyst with the Chinese National Automotive Industry Consulting and Development Corp.

The value of the deal is not known but Volvo, which was bought by Ford for US$6.49 billion, won’t be sold for less than US$3 billion, according to Jia. Geely couldn’t be contacted for comment Wednesday.

Representatives of Geely, one of China’s biggest private auto makers, have already visited Volvo’s headquarters, industry sources told Shanghai Daily.

The purchase will help Geely expand into the medium and high-level markets, Jia said.

Compared to American brands, European brands are better known by Chinese consumers, he said.

Geely sold 101,171 units between January and May, a jump of 57.8 percent year on year, because it had tapped into the second and third-tier cities after the government handed out subsidies to encourage people in rural areas to buy cars.

The China Passenger Car Association predicted this week that vehicle sales in the country would grow 17 percent this year from 2008, outpacing the 6.7 percent rise last year.

(Shanghai Daily June 17, 2009)

Chery Alado, a joint venture found by China’s automobile company Chery and Malaysian partners, unveiled its new CKD (Completed Knocked Down) sports utility vehicles (SUV) here on Tuesday.

The newly unveiled CKD cars were TIGGO SUV 2.0L Automatic and 1.6L Manual, the fourth model introduced into Malaysia by Chery.

The Chinese auto maker earlier has introduced into Malaysia three models — EASTAR MPV CKD, TIGGO SUV CBU (Completely Built Up) and A530 CBU, said Zhou Bi Ren, head of Chery International and Vice President of Chery Automobile.

Cheif Executive Officer of Chery Alado Automobile Sdn Bhd Meng Tao described that the latest 2.0AT TIGGO SUV as a modern, safe and easy-driving city car with advanced technology and complete configuration.

Meng said that the company would continue to introduce new models into Malaysia’s market to strengthen the cooperation between China and Malaysia in economy and trade, while constantly contributing to the local automobile industry.

The Chery TIGGO SUV has improved fuel-saving 2.0-liter ACTECO engine and its chasis was designed by Lotus from Britain.

The new car also offered innovative features such as leather seat, dual airbag, cruise control and rear fog lamp to increase driving pleasure and safety performance.

In addition, Chery Alado said that it would bring the TIGGO SUV bullet-proof model into the Malaysian automobile market in the near future.

The company believed that the bullet-proof model has market potential in Malaysia as it has been used to ensure the security and safety of key VVIPs and personnel during the 2008 Beijing Olympics.

Chery Alado Holdings Sdn Bhd was established in May 2008 through a partnership between Chery Automobile Co., Ltd, and Alado Corporation Sdn Bhd to assemble and distribute Chery cars in Completely Built Up (CBU) and Completely Knocked Down (CKD).

This strategic decision strongly reflects Chery’s confidence in the long-term better future of Malaysia and also is the first step in their mission to make Malaysia a regional automotive manufacturing hub, the company said.

(Xinhua News Agency June 17, 2009)

Shanghai, an economic powershouse in eastern China, saw loans for auto buyers grow fastest in credit extension for individuals amid robust sales of motor vehicles in the first five months of this year, the municipal banking regulatory commission said on Saturday.

At the end of May, loans outstanding for auto buyers stood at approximately 17 billion yuan (2.49 billion U.S. dollars) in the city, a growth of 55 percent against the end of May 2008.

China has since 2004, when it approved its first financing firm for motor vehicles, launched 10 such companies, including four in Shanghai.

The four, claiming a two-third share of the municipal auto financing market, recorded 10.6 billion yuan in loans outstanding for auto buyers at the end of May, up 35.29 percent.

The local banking regulatory commission said at the end of May, non-performing loan ratio for auto credits stood at no higher than 1.2 percent, below the average NPL ratio in the city.

According to China Association of Automobile Manufacturers, China sold 4.96 million home-made motor vehicles in the first five months, up 14.29 percent year-on-year.

The total included 3.66 million passenger vehicles, up 21.2 percent.

The passenger vehicles included 2.603 million cars, up 16.54 percent.

(Xinhua News Agency June 13, 2009)