SAIC Motor's Parent Said to Consider Listing Assets, Increasing Production

Shanghai Automotive Industry Corp., the parent of China’s largest domestic automaker, may list all of its operating assets and is studying several options to do so, said two people familiar with the company’s plans.

SAIC Motor Corp. and Huayu Automotive Systems Co., the two listed units of Shanghai Automotive, suspended trading of their shares pending an announcement about a “major matter” involving their parent, according to separate filings to the stock exchange on Feb. 11.

Shanghai Automotive sold automaking assets to SAIC in 2006 and car-parts operations to Huayu in 2008 as part of a wider transfer of businesses from China’s state-controlled companies to listed units. The Shanghai government-owned automaker is seeking to expand as vehicle sales jumped 32 percent in the nation last year.

Zhu Xiangjun, a Shanghai-based spokeswoman at SAIC, didn’t return telephone calls seeking comment. Johan Willems, GM’s Shanghai-based spokesman declined to comment.

SAIC, China’s biggest domestic automaker, is also considering raising production capacity at its minivan venture with General Motors Co. by at least 15 percent from its current target, said one person, who declined to be identified because the discussions are private.

1.5 Million By 2013

SAIC-GM-Wuling Automotive Co., a joint venture between GM, SAIC and the Liuzhou city government, are discussing ways to increase production capacity to at least 1.5 million vehicles by 2013, up from its current target of 1.3 million vehicles, the person said. The automaker may build new plants in Liuzhou in southern Guangxi province and in Qingdao in eastern China, to meet market demand, the person said.

One of the options considered is to build a new factory, the person said. A new factory with production capacity of 300,000 units may cost the venture up to 1.5 billion yuan ($227.4 million), the person estimated.

SAIC-GM-Wuling produces the best-selling Wuling Sunshine minivan and is currently expanding its production in Liuzhou, GM said in December. The automaker is building a new production base with an annual capacity of 400,000 to support production of its new brand of Baojun passenger cars, the Detroit-based company said in December. The base is set to be completed by the end of next year.

SAIC-GM-Wuling

SAIC-GM-Wuling will raise the capacity of its Liuzhou base to 800,000 by end 2012, the venture said last June. The automaker sold 754,961 Wuling Sunshine minivans, which cost as little as 30,000 yuan, in China last year, according to industry consultant JD Power and Associates.

Shanghai Automotive may inject automotive assets into SAIC Motor Corp., Shanghai Securities News reported on its website on Feb. 12, citing unidentified officials with knowledge of the plan.

SAIC, which has joint ventures with Volkswagen AG in China, has advanced 26 percent this year, compared with a 2.5 percent gain in the benchmark Shanghai Composite Index. SAIC Motor shares have gained about 14 percent in the past 12 months.

The automaker’s 2010 net income may more than double after sales increased 31 percent to more than 3.58 million vehicles, it said in a Jan. 28 stock exchange filing. January car sales rose 35 percent from a year earlier, the company said Feb. 11.

--Liza Lin and Ying Tian. Editors: Chua Kong Ho, Kae Inoue.

To contact Bloomberg News staff for this story: Liza Lin in Shanghai at +86-21-6104-3047 or llin15@bloomberg.net; Ying Tian in Beijing at +86-10-6649-7571 or ytian@bloomberg.net

To contact the editor responsible for this story: Kae Inoue at kinoue@bloomberg.net

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