BAIC Seeks Foreign Acquisition Targets
China’s Fifth-Largest Auto Maker Scouts Mid- to High-End Brands in Europe, U.S.
Beijing Automotive Industry Holdings Co., a joint-venture partner of Daimler AG DAI.XE +1.92% and Hyundai Motor Co. 005380.SE +0.81% in China, said Thursday it is scouting premium foreign car brands to buy.
“We have candidates in mind,” said Dong Haiyang, president of BAIC’s international arm. “We are seeking mid- to high-end brands in both Europe and the U.S., as well.”
BAIC had said previously it was conducting such a search in Europe.
Mr. Dong, speaking at an event in Beijing, said that the company had held talks with “a couple” of targets, adding that he hoped an agreement could be completed “as quickly as possible.”
To finance its overseas expansion, including assembly buildup, BAIC is gearing up for an initial public offering of stock in Hong Kong, said Mr. Dong, without adding how much the company could raise. In January, people familiar with the situation put the size of the IPO at $2 billion.
China has been the world’s largest auto market since 2009, but local car makers are still struggling to compete with foreign brands, even at home. Chinese brands had only a 27.5% share of the domestic sedan market in 2013, according to the China Association of Automobile Manufacturers.
Exports of cars from China also declined in 2013, falling 10% to about 600,000 vehicles.
Most Chinese car makers have yet to meet the stringent safety and emission standards of the world’s biggest auto markets such as Europe and the U.S.
“Low price, low quality and no service—that is the impression Chinese brands have around the world,” Mr. Dong said.
Buying a foreign brand would expedite BAIC’s effort to become a household name in the global car market and give it access to more advanced technology, he said.
Rivals are already headed in that direction. Last week, Dongfeng Motor Group Co. DNFGY -0.90% of China signed an agreement with PSA Peugot Citroën SA of France, whereby Dongfeng and the French state agreed to each buy stakes in Peugot.
The trend got a push in 2010, when closely held Zhejiang Geely Holding Group Co. bought Swedish car brand Volvo from Ford Motor Co. F -1.37% And in 2009, BAIC bought certain assets, including intellectual property for two sedans, from the Swedish car maker Saab Automobile AB.
BAIC sold 2.11 million motor vehicles in 2013, up 25% from a year earlier. Among the total, the company’s car-making joint ventures with Daimler of Germany and Hyundai of South Korea contributed about 60% of the sales volume, according to separate statements from the three parties.