Brilliance confirms car-design deal
New York-listed minibus maker Brilliance China Automotive Holdings has exercised an option to spend HK$642.55 million to acquire the right to specific car design technology.
The deal, through the company's 51 per cent-held Shenyang Automotive, is for the design of sedan cars and multi-purpose vehicles, which will form part of Brilliance China's efforts to diversify in the mainland market.
The company, which is also listed in Hong Kong, is buying the technology and design from China Automotive Co (CAC), a state-owned company.
Shenyang Automotive will acquire CAC's rights to the agreements previously signed with two Italian car design companies and the Britain-incorporated Motor Industry Research Association.
Under the agreements, the foreign companies would provide design, engineering, testing and prototype construction for CAC's sedan and multi-purpose vehicle manufacturing.
Brilliance China said the acquisition would facilitate its attempt to obtain approval to manufacture and sell sedans and multi-purpose vehicles in the mainland.
It also gave the company an opportunity to expand its product range to capture the 'anticipated growth in [domestic] demand for passenger vehicles', the minibus-maker said.
Brilliance China earlier said it was seeking the involvement of a foreign car-maker in its new sedan plant, which has an annual production capacity of 100,000 units. The plant was expected to turn out 20,000 units last year.
Analysts said the price tag was justifiable because the design would have a production run of three to four years and required minimal production line alterations.