Changzhou Iveco Divorced Remarried and Abandoned Changjiang Passenger Bus to Switch to SAIC
Foreign-invested automotive companies are reevaluating their strategies in the Chinese market, and weaker partners are increasingly becoming casualties of this transformation.
On July 24, Iveco announced a joint venture agreement with SAIC Motor, aiming to acquire a 67% stake in Chongqing Hongyan Automobile Co., Ltd., a manufacturer of heavy-duty commercial vehicles. The deal includes a €120 million investment in Chongqing, with Iveco contributing €40 million toward the construction of a new production facility. The agreement is still awaiting approval from the Chinese government.
To clear the way for its partnership with SAIC, Iveco recently terminated its collaboration with Changzhou Yangtze River Passenger Vehicles. It transferred its 50% stake in the joint venture for just $1, effectively ending the relationship. This move marks another example of “divorce and remarriage†in China’s auto industry, a trend that seems to be gaining momentum.
**Changzhou Iveco Awaits Reorganization**
According to an official from the Economic and Trade Commission in Changzhou, the dissolution of the partnership has been finalized, and follow-up procedures are currently underway. “The relevant work is being directly managed by municipal leaders, and more details will be released soon,†they said.
Iveco Changzhou confirmed that it no longer has any ties with Iveco, and the “Changzhou Iveco†brand will not be used moving forward. New business registrations are in progress. Meanwhile, Iveco has sold the intellectual property rights related to its technology to Changzhou Iveco, including the 391 series passenger car chassis, 12-meter and 8-meter bus models, and various parts. This allows Changzhou Iveco to continue producing vehicles incorporating Iveco technology.
An insider at Changzhou Iveco revealed that the company is now waiting for potential restructuring opportunities. Several companies have already expressed interest and are in early discussions.
“Our foundation is solid. We still have valuable resources,†the insider added.
**Iveco Faces Setbacks**
In August 2005, Iveco filed a lawsuit against Cheung Kong Bus Group and its chairman, Sun Yuanlin, in the Jiangsu Provincial High Court. The company alleged that Sun had authorized the transfer of RMB 120.58 million from the joint venture he led to the Changzhou Yangtze River Passenger Vehicle Group. Iveco sought the return of the funds along with interest.
This legal action was aimed at facilitating a three-way joint venture between Iveco, SAIC, and Chongqing Zhongqi. Initially, Iveco tried to withdraw from the Changzhou joint venture but was unsuccessful. It then pushed SAIC to directly purchase its shares in the company. However, SAIC faced resistance from Jiangsu Province, which demanded that it assume all debts and liabilities of Changzhou Iveco—potentially costing hundreds of millions of additional dollars.
After repeated failures, Iveco took the most aggressive route, filing a lawsuit against its former partner. This led to rapid progress: in September 2005, Changzhou authorities approved the divestment of Iveco’s stake and commissioned auditors to evaluate the company’s assets, using the valuation as a basis for returning foreign capital.
**Divorce and Remarriage Are Becoming the Norm**
As foreign automakers continue to adjust their presence in China, weaker partners are often left behind. Cases like Iveco’s are becoming more common, signaling a shift in how international players operate in the Chinese market.
Currently, resource consolidation is on the rise. In 2002, the "Tianjin Auto Restructuring" became public, with Tianjin Automotive transferring 50.98% of its shares in Tianjin Xiali to FAW. At the same time, Tianqi also transferred all its 75% equity in Huali to FAW. Behind this reorganization was the transfer of Toyota’s cooperation quota to FAW, leading to the creation of Tianjin FAW Toyota.
Similarly, Mercedes-Benz’s partnership with Yangzhou Yaxing ended when the German automaker sought to reallocate its cooperation quota to BAIC or Fuzhou. Reports of BAIC and Fuzhou acquiring Yaxing were actually part of a broader strategy to free up space for stronger alliances.
These examples illustrate that in China’s dynamic automotive landscape, partnerships are no longer permanent. Divorce and remarriage are becoming the norm, driven by evolving market demands and strategic realignments.
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