FAW Xiali will spend 3b yuan to lift output
Shenzhen-listed firm, the latest carmaker to announce expansion plans, aims to raise one billion yuan by selling new shares
Tianjin First Auto Work Xiali Automobile (FAW Xiali), the second-largest carmaker by sales in China, plans to spend three billion yuan to increase production capacity between this year and 2010.
To fund the expansion, the Shenzhen-listed company hopes to raise one billion yuan by selling new shares, according to mainland media reports.
'The total capital expenditure is around three billion yuan but we never said firmly one billion yuan would be raised from the market,' said Zhang Shuang, a representative at FAW Xiali's investor relations department.
Shares of FAW Xiali were suspended from trading yesterday pending the release of price-sensitive information.
The stock has gained 60 per cent over the past two weeks. It closed at 9.56 yuan before the suspension.
FAW Xiali is controlled by First Automotive Works, a major mainland carmaker that sold 196,800 vehicles last year, up 3.58 per cent from 2005.
FAW Xiali has a joint venture with Toyota Motors, which sold 55.3 per cent more cars last year in achieving total sales of 210,400 units.
Mainland carmakers are expanding in an effort to capitalise on the country's growing market which totalled seven million units last year, overtaking Japan as the world's second-largest carmaker.
China Association of Automobile Manufacturers estimated vehicle sales could reach eight million units this year.
Shanghai Automotive Industry Corp (SAIC) plans to spend about nine billion yuan on expansion this year, with priority in research and development.
Riding on the surging stock market, SAIC raised 19.1 billion yuan by selling joint venture businesses to its A-share listed unit, Shanghai Automotive, giving it funding to develop its own branded cars.
Meanwhile, Guangzhou Automobile Industry Group, the sixth-largest carmaker in China by sales, said it would revive a share sale plan this year. It did not give a timetable or say where it would seek a listing.
The company shelved the listing plan indefinitely last year, saying that a share sale in Hong Kong market would affect its H-share listed unit Denway Motor.
Chery Automobile is also planning to sell shares to fund expansion, while Dongfeng Motor aims to launch models under its brand for the first time next year.
ON THE ROAD
FAW Xiali's joint venture with Toyota sold 210,400 cars last year
China carmakers say sales this year could reach eight million
China overtook Japan as world's second-largest carmaker in 2006
