AVIC Drops Cooperation Talks With Dongfeng Auto

Shanghai, November 21, 2008: (Gasgoo.com) It has been "impossible" for the China Aviation Industry Corp (AVIC) to cooperate with Dongfeng Motor as big conflicts occurred during the negotiation between the two sides, Geng Ruguang, vice general manager of AVIC, was quoted by China Business News as saying.

AVIC II, one of the two predecessors of the newly-founded AVIC, had been in talks with Dongfeng Motor for cooperation before it was merged into AVIC earlier this month. However, the talks came to nothing and the AVIC is considering cooperation with other domestic automakers, said Geng.

Auto-making operations under the new AVIC mainly include Hafei Auto and Changhe Auto, which are the subsidiary auto companies of the former AVIC II. Rumor has it that Dongfeng Motor had the intention to buy shares of Hafei Auto but this plan failed as AVIC preferred to put a sellout package with both Hafei and Changhe together.

Tan Ruisong, vice general manager of AVIC, ever announced that the new AVIC will restructure the aviation business and automotive business after the merger. The automotive business will be operated by the capital management department. Hafei Auto and Changhe Auto have been under Hongkong listed AviChina Industry &Technology Company, Geng told the reporters yesterday.

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