Changan has agreed to take over two automakers under the Aviation Industry Corp of China (AVIC), the country's national aircraft company, in a move seen as backed by Beijing to help consolidate China's fragmented auto industry.

The parent of Chongqing Changan Automobile Co Ltd will acquire Harbin Hafei Automobile Industry Group and Changhe Automobile from AVIC, in the largest merger deal in the Chinese auto industry for years, the Xinhua news agency said.

It is reported that state-owned AVIC will get a 23 percent stake in the enlarged Changan Auto Group in exchange for the assets, which also include Harbin Dongan Auto Engine Co and Jiangxi Changhe Automobile Co.

After the restructuring, Changan Auto Group (Ford's Chinese JV partner) will have annual auto production capacity of nearly 2m units, Xinhua says.

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