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Shandong plans auto behemoth

By Li Fei (China Daily)
Updated: 2009-05-26 08:14

Three auto parts makers, including a leading engine maker and an earthmover manufacturer, will merge to create an industrial conglomerate in Shandong province with sales projected to exceed 100 billion yuan by 2012, the latest industry consolidation move in China's fragmented auto sector.

Weichai Holdings Group, the biggest shareholder of the country's major high-speed heavy-duty diesel engine maker Weichai Power, and Shandong Construction Machinery Group Co, parent of one of the nation's leading earthmover makers, and Shandong Auto Industrial Group, will form a venture called Shandong Heavy Industry Group Co, according to separate exchange filings by their listed units.

The three companies, all based in the eastern province of Shandong, did not elaborate on the details, such as the financial terms, the timetable and the future structure, of the planned merger in their exchange statements.

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But they all said the positions of their controlling shareholders would remain unchanged.

Weichai Holdings owns 14.92 percent of Hong Kong and Shenzhen-listed Weichai Power and 30.59 percent of Shenzhen-listed Weichai Heavy Machinery Co.

Shandong Construction Machinery has a 21.1 percent stake in Shenzhen-listed Shantui Construction, one of the country's biggest earthmover makers.

The combined sales of the three listed companies amounted to more than 40 billion yuan in 2008, according to their annual reports.

Shandong Auto Industrial Group has the capacity of producing 60,000 light trucks and 1 billion yuan of auto parts a year, according to Shandong Association of Automobile Manufacturers.