CHINA: Brilliance eyes Toyota minivan JV
Brilliance China Automotive said on Thursday it was in talks with Toyota on technology cooperation and the possibility of forming a minivan production joint venture.
Brilliance is China's eighth-largest car maker and a joint venture partner of BMW and already has a long term relationship with Toyota that has been transferring technology on minivan production to the Chinese company.
"We are exploring the possibility of making new minivan products together, which could involve equity cooperation, such as setting up a joint venture," chairman Wu Xiaoan told Reuters after a shareholder meeting.
Shareholders gave a green light for Brilliance to sell its loss-making Zonghua sedan manufacturing business to its parent, Huachen Automotive Group Holdings, for up to CNY550m (US$80.56m).
"Brilliance will focus its resources on the BMW joint venture and minivan production to make the firm more profitable," Wu said.
Brilliance posted a net loss of CNY386m in the first half of 2009 due to hefty losses from Zhonghua compared with a profit of CNY283m the previous year. BMW Brilliance contributed a net profit of CNY116m during the period, up 6%.
Huachen is also in talks with Mercedes-Benz on possible cooperation, such as using Benz's production facilities in China to develop new models of special purpose vehicles for the Chinese company, Huachen chairman Qi Yumin told Reuters.
Brilliance is confident about China's car market and expects sales and profit growth for its joint venture with BMW to exceed 20% next year, Wu said.
China continues to support the auto market by extending its stimulus policies, including tax incentives, and residents' savings remain high, so auto sales should rise next year although the growth will be lower than about 41% this year, Qi said.
"We expect China's auto sales growth about 15-20 percent next year," he said.
Sales of its joint venture with BMW reached 41,372 cars in the year to November and it is expected to sell over 43,000 this year. It posted 25% sales growth in the first half and H2 growth will be higher.
"The profit in the second half will be significantly higher," Wu said.
The company manufactures BMW 3 and 5 series sedans at a plant in the northeastern Chinese city of Shenyang.
Brilliance also planned to boost production of minivans to 100,000 in 2010, up 25% from this year, and would export 16,000 of them versus just 5,000 this year, Qi said.
Production of Zhonghua sedans will rise about 66% to 200,000 next year, he added.