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Wed, Jul 08, 2009 - Page 10 News List

BAIC plans Opel plant in China

AFP AND REUTERS , BEIJING

Chinese automaker Beijing Automotive Industry Corp (BAIC, 北京汽車工業), which is offering US$922 million for a majority stake in Opel, plans to build a plant in China and cut jobs in Europe if its bid succeeds, a report said yesterday.

In a non-binding offer submitted last week for the German-based unit of General Motors Corp (GM), BAIC proposed to spend US$2 billion on what would become Opel’s first factory in China, the Financial Times said.

The plant would come online in 2012 and make Opel models specifically geared toward the China market. In addition, BAIC would use Opel’s German plants to export to China, the London-based newspaper said.

The Chinese automaker also planned to shut down GM’s Antwerp plant in Belgium and cut Opel’s workforce across Europe, the report said, citing unnamed sources close to the matter.

A German economic ministry spokesman said this week that BAIC had written to German officials regarding Opel, without elaborating.

But earlier German press reports said the Chinese firm had proposed to take a 51-percent stake in Opel for 660 million euros (US$921.5 million) with state guarantees of 2.64 billion euros.

BAIC’s offer could put pressure on negotiations already under way for Opel.

Canadian auto parts manufacturer Magna International Inc, backed by Russian state lender OAO Sberbank, is in advanced talks with the US car giant to take a combined 55 percent stake.

According to German reports Carl-Peter Forster, head of GM Europe, has said he hopes Opel will be bought by Magna by the middle of this month, adding that the Canadian firm had a “considerable lead” on other possible buyers.

An executive at BAIC’s press office refused to comment yesterday.

But BAIC faces long odds in its bid to buy European carmaker Opel, because China remains wary of firms taking over foreign automakers, influential Chinese magazine Caijing said.

The government’s cool attitude toward such outward investment in the auto industry was the main reason Geely Automobile Holdings Inc’s (吉利汽車) interest in Ford Motor Corp’s Volvo cars was shot down, said Caijing, citing unnamed sources.

BAIC could only get its foot in the door if the deal between GM and Magna were to fall apart completely, Caijing said on its Web site.

Caijing said a crucial BAIC consideration in its bid for Opel was taking control of its intellectual property.

With Opel’s technology, BAIC would be free to build Opel cars in China, the world’s biggest auto market and one of its fastest growing.

The China market is also one of the few bright spots for GM, however, and BAIC’s plans to build an Opel plant there would put it in competition with the US firm.

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