(Yicai Global) July 20 -- FAW Xiali Automobile is looking to sell its debt-laden subsidiary FAW Huali Automobile for just CNY1 (USD0.15). Despite its liabilities, buyers may be lured by the unit's most valuable resource: a vehicle production license.

The buyer will assume FAW Huali's more than CNY800 million (USD118 million) debt to its parent company, Tianjin-based FAW Xiali said in a statement yesterday. The parent will also retain control of the unit's staff, land and plant facilities.

FAW Huali's business making subcompact passenger cars has been sluggish since FAW Xiali acquired it in 2008. But the unit's main draw for potential buyers lies in its production license, since the government no longer issues any, Zeng Zhiling, LMC Automotive's chief research officer, told Yicai Global.

Many new carmakers are piling into the Chinese auto market, the world's biggest, and some are more than likely to be interested in buoying investor confidence by acquiring manufacturing rights from emerging new energy carmakers such as FAW Huali. Without such a permit, they cannot raise funds, Zeng said.

A successful transformation of parent FAW Xiali, which makes budget cars, may also require help from FAW Group and the Tianjin municipal government, Zeng added. Since the government now encourages output of medium- and high-end new energy vehicles with greater mileage, the outlook for FAW Xiali's low-end models and NEVs is still unclear, he said.

Editor: Emmi Laine