CHONGQING – Chinese smart EV startup AIWAYS has acquired a 50 percent stake in Jiangling Holding Co., Ltd. for ¥1.747 billion, becoming a strategic investor in the unit previously 50:50 owned by Chang’an Automobile Co., Ltd. and Jiangling Motors Group Corp. (JMCG) that was formed in 2004 to produce Land Wind branded SUVs.
According to an announcement released by Chang’an on June 4, ¥1 billion of that investment will be injected as registered capital of Jiangling Holding, doubling its total registered capital to ¥2 billion. The new investment dilutes equity shares of Chang’an and JMCG in Jiangling Holding from 50 to 25 percent, respectively.
The move paves the way for the Shanghai-based AIWAYS to obtain the coveted production license to produce its U5 smart SUV at a production facility in Shangrao, Jiangxi Province, not far from where Land Wind vehicles are produced in the provincial capital of Nanchang. AIWAYS will inject ¥650 million of the investment within 10 days of the agreement and the remaining within one year of the agreement.
Jiangling Holding had listed a notice on the Beijing United Property Exchange on April 3 seeking one strategic investor through equity capital increase.
Chang’an said in the announcement that the move was aimed at increasing the competitiveness of operational efficiency of Jiangling Holding amid cutthroat competition in the SUV segment and boosting its transformation toward electrification and intelligent connectivity, which required external resources and diversification of its equity. Chang’an, on the other hand, can focus on the development of its own branded cars and SUVs, which have seen falling sales amid an overall market slowdown.
Jiangling Holding previously is also the biggest shareholder of Jiangling Motors Corp. (JMC), which produces Jiangling and Ford brand SUVs, light vans and pickups. In April, Jiangling Holding split into two entities: Jiangling Investment Co., Ltd. and new Jiangling Holding, with the former taking over the 41.03 percent ownership in JMC and ¥300 million in financial liabilities. The new Jiangling Holding, therefore, has become a 50:25:25 shareholding company among AIWAYS, Chang’an and JMCG. The new Jiangling Holding retains plant, property, equipment, technology, operational assets and goodwill.
Jiangling Holding had revenues of ¥3.77 billion in 2018 but lost ¥800 million. Chang’an and JMC, both domestic-listed companies, had respective revenues of ¥16 billion and ¥6.5 billion in the first quarter of 2019, but net profit at the two companies fell 250.62 and 83.62 percent to negative ¥2.1 billion and ¥25.16 million, respectively. Last year, Chang’an had revenues of ¥66.3 billion and net profit of ¥680 million, while JMC had revenues of ¥28.2 billion and net profit of ¥91.3 million.
AIWAYS was established in February 2017 by former FAW-Volkswagen and SAIC-Volkswagen executive Fu Qiang. The company officially unveiled the U5 SUV last November and plans to launch it to market in 2020. Last year, it had revenues of ¥33.19 million but lost ¥970 million, according to numbers revealed by Chang’an.