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Chang’an and Suzuki discuss mergers of two Suzuki JVs

CHONGQING – Chairman of Chang’an Automobile Group Xu Liuping and president of Suzuki Motor Osamu Suzuki met in Chongqing on September 24 to discuss the merger of Changhe-Suzuki Automobile and Chang’an-Suzuki Automobile, according to media reports.

An insider suggests the merger is waiting for approval from the National Development and Reform Commission (NDRC) and could get the green light ahead of the Chang’an-Ford-Mazda restructuring plan.

The merger plans, as revealed by the sources, include combining the operation of Changhe-Suzuki into that of Chang’an-Suzuki, eliminating the Changhe-Suzuki brand, and adjusting the equity ratio of the new JV from 51:49 to 50:50. Chang’an-Suzuki, Changhe-Suzuki and Suzuki imports will share the same sales network and same marketing policies will be enforced after the merger.

To be able to get the 1 percent equity share it has waited for two years, Suzuki must promise Chang’an not to seek a new JV partner within five years, as required by Chinese side. “Transferring 1 percent of equity share is not a lost for Chang’an. It will enhance the cooperation between the two parties and encourage more new product introduction from Suzuki,” commented a Chang’an employee.

This long anticipated merger has upset Changhe Automobile. The fate of the Changhe brand, the personnel adjustments after the merger and how would its business and industry position be affected are issues that concerns the Jiangxi-based automaker.

The insider believes the goal of the merger is to minimize Changhe’s lost. Other than its brand and industry position, much will remain the same after the merger.

Under Chang’an’s plan, Changhe’s plant at Jingdezhen will focus on crossover vehicles and microvans, the Jiujiang manufacturing base will mainly produce sedans and crossovers, and its third production facility in Hefei will assemble commercial vehicles only.

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