Guangzhou Automobile Group, China’s sixth-largest automaker, will buy a 29% stake in Hunan Changfeng Motors in what is seen a move toward auto industry consolidation, Bloomberg reported. The company confirmed that it would purchase 151 million shares from Changfeng Motors’ parent company to become the largest shareholder, but gave no financial details. Guangzhou Auto already produces cars through joint ventures with Toyota and Honda. Adding Changfeng to its portfolio will allow Guangzhou Auto to expand its product offering to include sport-utility vehicles. Shanghai-listed Changfeng, which is part-owned by Mitsubishi, is said to lack capital for expansion on its own. But with Guangzhou Auto it will invest US$1.47 billion in Hunan province over the next five years with a view to creating an annual production capacity of 500,000 units. There are about 130 automakers in China. The government wants to reduce the largest 14 companies, which account for 90% of production, to 10 by 2011.
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