BEIJING, Nov. 10 (Xinhua) -- Changan Automobile Group Co. agreed Tuesday to take over the auto operations of Aviation Industry Corp of China (AVIC) to form a new auto manufacturing giant.
AVIC will take a 23-percent stake in Changan in return for Harbin Hafei Automobile Industry Group, Jiangxi Changhe Automobile, Dongan Power, Changhe Suzuki and Dongan Mitsubishi.
China Ordnance Equipment Group Corporation (COEGC), parent of Changan Automobile, will hold the remaining 77 percent.
Specific figures about the value of the deal were not available due to "unfinished reassessing and examing procedures," but they would be revealed in the near future, said Li Fangyong, chairman of the AVIC auto operations.
The Changan-AVIC deal is the second major auto consolidation move this year after Guangzhou Automobile agreed to take a 29-percent stake in sport utility maker Hunan Changfeng Motor Co. in May.
However, it was the first deal between state-owned auto companies this year, a move in line with the government's stimulus plan to consolidate the auto industry.
The moves came after the government put forward a plan earlier this year to consolidate its fragmented auto industry, which has carmakers mostly competing in the lower end of the market.
Under the plan, the government will cut the number of major auto groups to 10 or fewer from 14, and form two or three auto giants through mergers and acquisitions with annual output of more than 2 million vehicles each.
The restructured Changan Auto Group will have an annual auto production capacity of almost 2 million units, said Xu Liuping, chairman of Changan Group.
Xu said the group aimed to sell 2.6 million vehicles in 2012 and 5 million units, including own-brand, high-end vehicles, in 2020.
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