Chery to Merge with Light-Truck Maker JAC

Chery Automobile Co. Ltd. reportedly plans to merge with Jianghuai Automobile Co. Ltd. (JAC), China’s largest chassis producer and the country’s second biggest light-truck maker.

The plan, requiring approval by China’s central government, would give JAC a piece of the profitable passenger-car market and Chery a bigger foothold into the commercial-vehicle market in China.

Details of the plan call for Chery to purchase a portion of JAC’s assets at a discounted price and also receive technical support for its own commercial vehicles.

JAC, in turn, will sell its shares to Chery for use of Chery’s license to build sedans, reports the 21st Century Business Herald.

JAC already has invested hundreds of millions of Renmimbi in development of a sedan and built a 50,000-unit plant to open next month to support the car, the report says.

However, it has been unable to receive a license from the government to build sedans due to China’s fears there will be too much supply and not enough demand for the vehicles, the report says.

Meanwhile, Visionary Vehicles LLC, the company started by Malcolm Bricklin to import Chery vehicles to the U.S., will not import its first Chinese-built car until late 2008 or early 2009. Bricklin originally planned to begin selling Chery models in the U.S. in early 2007.