Chinese Liquor Maker Could Enter Auto Industry Through Investment in Cowin Auto
Liao Shumin
/SOURCE : Yicai
Chinese Liquor Maker Could Enter Auto Industry Through Investment in Cowin Auto

(Yicai Global) Dec. 26 -- Chinese carmaker Cowin Auto's relocation to Yibin, Sichuan province could see a local liquor maker, Wuliangye Group Co., make its way into the automotive industry.

Cowin Auto, officially Yibin Kaiyi Motors Co. following a name change after the relocation, is a unit under Chery Automobile Co., but that doesn't mean it's equity structure won't change, Chen Chaozhuo, an auto industry expert, told Securities Daily.

Chery recently took on outside investment by selling a 25-percent stake in subsidiary Qoros Auto Co. to property and financial conglomerate Baoneng Group, and Chen believes it could look to make a similar deal with Cowin by selling shares to Wuliangye.

Qoros struck a deal earlier this year with Yibin municipal government and other parties, pledging to invest CNY5.5 billion (USD840 million) to build a factory in the city. Alcohol is currently a key industry in the area, but insiders believe the government is looking to transition into the auto sector.

Wuliangye Group publicly showed its intention to enter the auto industry back in 2003, and invested in Brilliance Auto in 2006 to build car engines. Whether or not the group helped Cowin relocate to Yibin is "still unknown," a Chery insider said.

Cowin Auto has relied on Chery for resources and manufacturing capacity for quite some time, an unidentified source said. It's currently performing poorly, so would be grateful to receive outside support from Chery's partners. Yibin government can't buy into Qoros and Cowin will make a good alternative, he added.

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Keywords: Yibin , Wuliangye Group , Chery , Cowin Auto , Qoros Auto