Chinese Auto Firm Eyes European Deal

18 February 2009

BEIJING/OSAKA: Chery Automobile, China's biggest auto maker, is considering purchasing a European car marque as it seeks to expand internationally. The move reflects the growing ambition of Chinese brand owners.

Peter Walshe, of Millward Brown, has argued that Chinese brands have failed to implement effective international expansion plans thus far, as shown by Lenovo's purchase of IBM's computing business, but suggests this could change in the future.

According Jin Yibo, Chery's assistant general manager, there is "a possibility for us to acquire some European auto companies with long histories", with observers suggesting one possible contender is Volvo, which is currently owned by Ford.

Chery, which has operations in Iran and Russia, saw sales fall by 7% to 356,000 in January, but Jin argues buying a foreign brand "is one way to help build our company into an international automaker."

By contrast, Japanese electronics firm Panasonic is looking to overcome the downturn by encouraging 10,000 senior staff members to spend ¥200,000 ($2,172; €1,721; £1,500) on its products.

Panasonic is urging its top staff to "recognise the severity of the current business environment" by purchasing a range of electrical goods by July, having announced plans to shut 20% of factories and cut 15,000 jobs earlier this month.

Data sourced from Bloomberg; additional content by WARC staff