Automotive News   |   Automotive News Europe   |   Autoweek   |   Automobilwoche

Automotive News China Newsletter
Register our free newsletter, sent each Monday and Thursday

     Automakers   Suppliers   Auto Show   Comment   Car Cutaway   Newsletters   Press Releases   Register for Newsletter
  Contact Us:   Editorial   Advertising   Subscription Information   |   About Us   Media Kit
Home >> Automaker Email this story   Print this story
 
VW eyes buying big stake in China partner JAC, report says
Reuters | 2019/4/12

HONG KONG -- Volkswagen Group is exploring purchasing a big stake in its Chinese electric-vehicle joint-venture partner JAC Motors and has tapped Goldman Sachs as an adviser on the plan, people with direct knowledge of the matter said.

The move by VW, the largest foreign automaker in China, to buy into JAC is the latest step by foreign automakers to increase stakes in Chinese joint venture partners or in individual joint ventures since Beijing relaxed ownership rules last year in the world's biggest car market.

JAC Motors, responding to the report, said Thursday it had not held talks with Volkswagen.

"The company and Volkswagen have not conducted formal business discussions on the matters mentioned in the news reports nor does it have any plans for an equity acquisition," JAC said in a stock exchange statement.

BMW agreed in October to buy control of its main joint venture in the country for 3.6 billion euros ($4.05 billion). Daimler also plans to increase its stake in local partner BAIC.

Foreigners were previously prevented from controlling any Chinese automaker or joint venture. Beijing last year removed such caps for companies making full-electric and plug-in hybrid vehicles. Limits on commercial vehicles makers ease in 2020 and by 2022 for the wider car market.

VW, which has a market capitalization of 75 billion euros, is not currently a shareholder in Shanghai-listed JAC, which has a market value of about $1.7 billion, according to Refinitiv data.

The German car giant's plans are at an early stage, but it is keen to take a big stake, said three of the people. Two of them said it will seek to buy shares from JAC's major shareholders, which are mainly state-backed firms owning over 40 percent, showed Refinitiv data.

JAC's parent, Anhui Jianghuai Automobile Group Holding, holds a 24 percent stake and is fully controlled by the local government.

When contacted by Reuters, VW said: "We are carefully watching what the implications are for our business and for our joint venture partners. In this regard we will explore all possible options together with all stakeholders to secure long-term success in China."

JAC and its parent did not respond to requests for comment. Goldman declined to comment. The people declined to be identified as the matter was confidential.

JAC is trading at a trailing price-to-book ratio of 0.84, which means VW would have to pay a premium for shares since JAC's state shareholders cannot sell shares for less than their book value.

VW in China
VW, which delivered 4.21 million cars in mainland China and Hong Kong last year, has operated in China for decades and, besides JAC, has joint ventures with state-owned FAW Group and SAIC Motor.

The German automaker formed its 50/50 JV with JAC in 2017 to research and develop zero-emission passenger cars as VW has committed almost one-third of the industry's EV spending, about $91 billion, betting big on the Chinese market.

VW looks to shift a large part of its planned EV production in China to JAC if it ends up operating the local automaker after a stake purchase, said one of the people.

JAC warned in January of a 770-million-yuan net loss for 2018 mainly due to a drop in car sales, compared to a 432-million-yuan profit in 2017. Excluding exceptional items such as government subsidies, losses would reach 1.9 billion yuan, the company said. It will release annual results on April 30.

China last month toughened up its EV subsidies amid concerns that generous local government support designed to produce regional industry champions has contributed to overcapacity and inefficiency.

JAC, China's 11th largest local automaker by group sales, makes a range of commercial vehicles including pickup trucks and heavy-duty trucks. It also produces vehicles for electric car maker Nio, one of Tesla's rivals in China.

Related Stories
  • VW Group sales continue to decline on weak VW, Skoda results
  •     --Published:2019/16/4
     
  • VW plans Tesla-fighting electric crossover
  •     --Published:2019/16/4
     
  • VW: China to become global software development hub for AV tech
  •     --Published:2019/16/4
     
  • Why VW may become 2nd foreign automaker to gain control of China JV
  •     --Published:2019/12/4
     
  • VW signs up Chinese lithium supplier
  •     --Published:2019/9/4
     
  • Europe's automakers scramble to protect profits in China
  •     --Published:2019/2/4
     
  • VW brand to launch 3 electric cars in mid-2019
  •     --Published:2019/29/3
     
  • VW unveils first 3 models under entry-level Jetta subbrand
  •     --Published:2019/26/3
     
  • For global automakers, the urgent but delicate need to take control of China JVs
  •     --Published:2019/22/3
     
  • VW CEO draws SAIC complaint over remarks about raising stake in joint ventures
  •     --Published:2019/19/3
     
  • VW Group sales fall in Feb. behind weak Skoda, VW brand results
  •     --Published:2019/19/3
     
  • VW's newest brand arrives at a bad time for Chinese automakers
  •     --Published:2019/1/3
     
  • Volkswagen, Microsoft deepen cloud computing ties
  •     --Published:2019/1/3
       
     
     

    Our Newsletter Editions
    Automotive News China produces two email newsletters each week. You can sort your news by the articles highlighted in each of our newsletters here.

    Select your newsletter     

     
     

    Automotive News China
    Room 1303, Building 2, Lane 99, South Hongcao Road,
    Shanghai 200233
    Telephone: 86-139-1851-5816
    Fax: 86-21-6495-0895
     
    Home | Help Center | About Us | Privacy Policy | RSS
    Entire contents © Crain Communications, Inc.
    Use of editorial content without permission is strictly prohibited. All Rights Reserved.
    ICP06057291