The Guardian
China's largest carmaker SAIC (Shanghai Automotive Industry Corporation) and its smaller rival Nanjing Automobile, which owns the MG Rover brand, yesterday confirmed their long-expected merger, creating a national car group that aims to rival big multinationals. Separately, Italy's Fiat agreed to sell its 50% stake in its loss-making passenger car venture with Nanjing to the Chinese firm, ending a strained relationship. SAIC will pay 2.095bn yuan (£144m) for the vehicle and core auto parts operations of Nanjing, the Chinese firms' parent companies said in a joint statement. Nanjing's parent company, Yuejin, will in return get 320m shares in SAIC, equal to 4.9% of the Shanghai-listed firm's total shares. "Faced with global competition, we need to go down the path of mergers and consolidation," said Hu Maoyuan, SAIC's chairman. SAIC's ventures with General Motors and Volkswagen are China's biggest car sellers, with combined sales of 441,584 cars in the first half of 2007, or 14% of the market. The MG Rover facilities in England, acquired by Nanjing in 2005, will serve as a platform for tapping the European market, said Chen Hong, SAIC's president.