On July 8th, at the half-year working meeting of Chang'an Automobile, Chang Liu, chairman of Changan Automobile, emphasized to the management present: Chang’an Automobile’s principle of merger and acquisition and reorganization is: a single equity structure, full flow and utilization of resources, and Chang’an leading.

Two days before the meeting. Xu Liuping explained his own principle in advance. “Changan Automobile will not make acquisitions for mergers and acquisitions. It will only blindly expand for millions of production, but will follow the guidance of the “Auto Industry Adjustment and Revitalization Plan”. The market rules work in a positive and prudent manner, and everything is aimed at maximizing Changan’s interests.”

Chang'an Automobile needs to be merged and reorganized. What lies ahead of Xuliu Plan is this: First, Chang'an Automobile currently has insufficient production capacity, and both micro-vehicle and passenger car businesses do. The production capacity of the five factories producing cars is 280,000. It is estimated that the utilization rate will reach 90% next year, so this year we must consider the follow-up production capacity arrangements. Compared to investing in new production capacity, the cost of M&A capacity is relatively low, and it can be quickly put into use.

Secondly, the regional layout of Changan Automobile in the country is still not perfect. The existing four major bases (Chongqing, Hebei, Nanjing, and Nanchang) are distributed in the southwest, north China, and east China and have not yet extended to the northeast and south China. However, the current policy red line is - "The automobile industry adjustment and revitalization plan" requires "new automobile production enterprises and the establishment of branches in other places, must be based on mergers and acquisitions of existing automobile manufacturers."

Eat Hafei first and then seek Changhe?

There have been reports that Changan Automobile intends to acquire Volvo Cars. According to the reporter’s understanding, Chang’an Automobile did have an interest in Volvo Cars, but after considering various factors such as capital, its own technical level, and the ability to digest advanced technologies, management capabilities, and risks, it eventually chose to give up and returned to the company. The way to produce more new models and expand cooperation with Volvo.

Changan Automobile related sources revealed that the current goal of Changan Automobile's merger and reorganization is domestic auto companies.

From the analysis of the principle of merger and reorganization of Changan Automobile, Hafei Automobile and Changhe Automobile, both owned by AVIC Automotive, are the best restructured objects of Changan Automobile and can simultaneously solve the two problems of expanding production capacity and optimizing the industrial area layout. Zhang Baolin, the general manager of Changan Automobile, once stated that he does not rule out the possibility of acquiring the same type of company in order to enlarge the mini vehicle. However, when Xu Liuping was interviewed by reporters, he did not confirm the news that Changan Automobile planned to acquire Hafei and Changhe Automobile.

From the point of view of expanding production capacity, Hafei Motor has an existing production capacity of approximately 400,000 complete vehicles and 450,000 engines, and Changhe Automotive has an existing production capacity of 300,000 complete vehicles and 150,000 engines. These production capacities include two parts: mini-vehicle and sedan, which can be used by Changan Automobile after a modest retrofit. If you retain Hafei's own brand cars, then Changan Automobile can also increase the brand of an independent car.

From the perspective of perfecting the regional layout, Hafei Motors is headquartered in the northeastern region and has a branch company with 100,000 capacity in Shenzhen and a branch company in Weihai, Shandong Province. If the successful acquisition of Hafei Motors, Changan Automobile will be able to deploy in the Northeast, and at the same time, it will use the Hafei Shenzhen Base to achieve expansion into southern China.

Changhe Automobile is headquartered in Jiangxi Province. Besides having two production bases in Jingdezhen and Jiujiang in Jiangxi, it also has a production base in Hefei, Anhui Province. If Changhe Automobile is acquired, it can enrich the strength of Changan Automobile in East China and extend its reach into central China.

The acquisition of Changhe Motors could also integrate Changan Suzuki and Changhe Suzuki to resolve the conflict between the two joint venture companies competing for Suzuki products. Xu Liuping had previously revealed that Changan Automobile is planning to adjust the joint venture. One of the contents is likely to adjust Chang'an Suzuki's share structure from 51:49 to 50:50. This way Suzuki Motors can concentrate all its energy and resources on joint ventures with Changan Automobile.

The overall market guess

With the start of a new round of mergers and acquisitions expansion and joint venture adjustments, Changan needs to stockpile a large amount of follow-up development funds. Xu Liuping’s plan for the overall listing of Changan Automobile is particularly urgent.

On July 1, Changan announced that its controlling shareholder, China Southern Industrial Automotive Co., Ltd. was renamed "China Chang'an Automobile Group Co., Ltd." This is a clear sign of Changan's overall listing, after Southern Motors planned to integrate military equipment. The idea that the Group's automotive business and its overall listing went completely out of business.

The popularity and influence of Nanfang Automobile is far less than that of Changan Automobile. This time, the Southern Vehicle Group was renamed by the Armed Forces Group to further improve the brand value and influence of Changan Automobile. If the Corps Group still plans to market its automotive business as a whole, the most likely way is for Changan Automobile Group to inject its assets into Changan Automobile.

“Changan Automobile will not change its capital operating platform because 90% of the automobile assets of the CSB Group are in Changan Automobile. This platform is also difficult to change.” Xu Liuping restructured his organizational structure in the past half year The general manager of each division directly reports to the chairman. The non-automotive business of Changan Group was stripped in advance. For example, Changan TV Station, newspapers, etc. have already packaged up and set up media companies and operated independently.