(Yicai Global) Sept. 5 -- State-owned carmaker Chongqing Chang'an Automobile has picked up the remaining 50 percent of its joint venture with Suzuki Motor as the Japanese auto firm exits China to focus on other Asian markets.
Chang'an will pay just CNY1 (15 US cents) for the shares in Chongqing Chang'an Suzuki Automobile, it said in a statement yesterday. It will pick up some 40 percent of the joint venture from Suzuki Motor and 10 percent from its local arm, Suzuki China Investment.
The move completes Suzuki's exit from the world's largest auto market after ending a partnership with another Chinese carmaker, Jiangxi Changhe Automobile, in June.
China unveiled a scorecard-based appraisal system for carmakers in April, which assessed average fuel consumption of a manufacturer's vehicles and its progress in developing new-energy vehicles. Costs would increase for those which do not produce any NEVs, an area where Suzuki lags behind many other firms with its zero electric models, prompting it to look for greener pastures in India and other emerging markets.
The company has also failed to keep up with changing consumer preferences in China -- where average wealth is increasing and drivers are opting to buy larger cars. Suzuki only had two sports-utility vehicles in its China range, the Vitara and the S-Cross crossover, and was best known for its Alto micro car.
As of April 30, Chang'an Suzuki had total assets of around CNY4.5 billion (USD659 million) and estimated net assets of negative CNY91 million (USD13 million), but the Chinese carmaker is keen to snap up its production lines and other equipment and facilities.
The target firm has been functioning as an original equipment manufacturer for Chang'an so will provide an immediate boost to the parent's production capacity and keep employees at the factories in work. Chang'an Suzuki has two plants, both in Chongqing, and some 3,400 staff -- it produces 350,000 cars a year.
Editor: James Boynton