Three Chinese automotive groups compete for Fujian Motor Industry Group as acquisition target

Jan. 1, 2020
Executives of Beijing Automotive Industry Holding (BAIC) recently met again with Fujian Motor Industry Group, in hopes of restating acquisition talks following the fruitless negotiations in 2009.

Executives of Beijing Automotive Industry Holding (BAIC) recently met again with Fujian Motor Industry Group, in hopes of restating acquisition talks following the fruitless negotiations in 2009. At the same time, two other Chinese automotive groups, Guangzhou Automobile Industry Group (GAIG) and Dongfeng Motor Corporation (DFM), have also expressed their intention to take over Fujian Motor.

In 2009, BAIC was in talks to buy Fujian Motor's 40 percent stake in a Daimler AG joint venture and during the talks BAIC also indicated an interest in fully acquiring Fujian Motor. However, the reorganization plan reached an impasse, mainly due to Fujian government’s reluctance to hand over its control over the local automotive industry. “BAIC has never, during the intervening three years, abandoned its plan to purchase Fujian Motor, - they have just been waiting for the right time,” said people familiar with the matter.

GAIG and DFM intend to acquire the Fujian-based carmaker largely because related assets and partnerships have close ties with the target. Sources said that GAIG is secretly reaching out to Fujian Motor in the hope of reorganizing the latter. GAIG is pushing ahead with the establishment of a 50/50 joint venture with Mitsubishi, which holds a 25 percent stake in Fujian Motor’s Soueast Motor. For this reason, the combination of GAIG and Fujian Motor is considered a viable way of consolidating the partnership between GAIG and Mitsubishi.

DFM is trying to restructure Soueast Motor. DFM aims to produce and sell 2 million vehicles under its homegrown brands by 2015. However, sales of such vehicles were only 108,000 units in 2010. To achieve this target, a new development roadmap will be necessary.

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