Beijing's oldest car plant could face bankruptcy after five years of losses and may sell prime land in the city centre to pay off its debts. The state-owned Beijing Auto & Motor Cycle Manufacturing Plant was set up in 1958 and produced the city's first car, motorcycle and military jeep. But intense competition in the market because of over-capacity and weak demand meant that it started to lose money in 1994, with a loss of 1.4 million yuan (about HK$1.3 million). The loss rose to 21 million yuan in 1996, 71 million yuan in 1997 and 97 million yuan last year, the Beijing Youth Daily reported yesterday. 'If we do not turn the company round, we could face bankruptcy,' a company official said. 'The competition is very fierce - it is a buyers' market. 'We must reach our 1999 sales target of 20,000 vehicles, although this will be very difficult.' He said the company had a debt-asset ratio of 40 per cent, about half the average for a state firm, and was considering the sale of one of its sites and moving to a cheaper location in the suburbs. 'We are looking at a new site but it must have all the necessary conditions, with water, electricity and the necessary environment protection,' he said. Beijing Auto has a joint venture with Chrysler producing Cherokee Jeeps. An official of the joint venture said that the financial difficulties of Beijing Auto had had no impact on it. 'We share a lot of components and customers. We hate to see the mother company in trouble but this has not affected us,' he said. The company, set up in 1958, has three sites in central Beijing, which general manager Ran Shaoping estimates are worth a total of 3.8 billion yuan, with the main site in Guanghua Road in northeast Beijing, where most foreign businesses are based, worth two billion yuan. Mr Ran took over the position last August, the sixth general manager in the past seven years. The Beijing Youth Daily quoted Mr Ran saying he gave himself three years to turn the company round. If he failed, he would resign and take a more humble post in the company. He said the planning department initially proposed a production target of 14,000 vehicles and a loss of 120 million yuan for this year but that he rejected this as a recipe for failure and decided on the 20,000 figure. He said the firm would concentrate on cars for exports to developing countries that have strong demand for cheap cars and on farm vehicles. The company has 5,000 workers, down from an original 12,000. Last year was one of the worst on record for the mainland's car industry.