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Fuyao Glass says no interest in US auto glass assets

Post Time:Oct 27,2008Classify:Company NewsView:444

SHANGHAI, Oct 24 (Reuters) - Fuyao Glass Industry Group Co, China's largest automotive glass maker, has no interest in buying U.S. auto glass assets despite having been approached about such deals, its chairman said, as its own growth is being hampered by a slowdown in domestic car sales.

Struggling with a faltering economy and a severe credit crisis, General Motors (GM.N: Quote, Profile, Research, Stock Buzz) and other Detroit automakers are cutting jobs and shedding assets.

But Fuyao, which two years ago sought to buy glass manufacturing assets from Automotive Components Holdings LLC, a parts unit of Ford Motor (F.N: Quote, Profile, Research, Stock Buzz), now has no interest in playing white knight.

"We have been approached for several deals lately, but we are no longer interested. I don't think the Chinese can turn things around if the Americans themselves have given up amid such a sharp market downturn," Cho Tak Wong told Reuters on the sidelines of an entrepreneur forum on Friday.

Other major Chinese auto industry players, including SAIC Motor Corp (600104.SS: Quote, Profile, Research, Stock Buzz) and Dongfeng Motor Group Co (0489.HK: Quote, Profile, Research, Stock Buzz), two of the country's three biggest automakers, also responded coolly recently when GM shopped around its Hummer SUV unit and Ford reviewed the prospects for its Swedish premium brand, Volvo.

Hunan Changfeng Motor Co (600991.SS: Quote, Profile, Research, Stock Buzz), partly owned by Mitsubishi Motor (7211.T: Quote, Profile, Research, Stock Buzz), which showed initial interest in Hummer, backed off after a tour of Hummer's U.S. production facility, a source with direct knowledge of the matter told Reuters in August.


"Times have changed. Looking back, it is actually a good thing that the Ford deal did not come through at that time," Fuyao's Cho said.

Talks between Ford and the Chinese auto glassed maker came to a halt in late 2006 partly due to worries that the sale of U.S. industrial assets to a Chinese company might run into political opposition in the United States, sources close to the deal had told Reuters.

After years of breakneck growth, car sales in China, the world's second largest auto market, began to taper off in the first half of this year as a slowing economy and natural disasters, including a devastating earthquake in the southwest, curbed consumer demand.

Car sales fell 1.4 percent in September from a year earlier, a second straight monthly decline, in part due to a roughly 20 percent hike in fuel prices in late June. Before August, there had been only two monthly sales declines in five years.

The slowdown also dented growth at Fuyao, which supplies auto glass to nearly all of China's major automakers, forcing it to all but abandon its target for 40 to 50 percent net profit growth in 2008, Cho said.

He said the company had expected a net profit of considerably more than 1 billion yuan ($146 million) this year.

"But now that seems unlikely. There is no doubt that our growth will continue to slow," Cho said.

Fuyao's net profit in 2007 jumped nearly 50 percent to 917.21 million yuan.

It has stopped capital investment in new capacity since the first half of the year and scrapped a 3 billion yuan share issue plan in February.

"We have since decided not to raise funds from the capital market for five years," the chairman said.

"We are now at the edge of a typhoon. If we can shut our windows and lock our doors firmly, we won't be hurt too badly when it hits," he added. ($1=6.835 Yuan) (Editing by Edmund Klamann)

Source: ReutersAuthor: shangyi

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