Harbin Hafei Motor Co

Harbin Hafei Motor Co., LTD (referred to hereafter as Hafei Motor), is a subsidiary of Harbin Aircraft Industry (Group) Ltd., which in turn belongs to the state-controlled China Aviation Industry Corporation II which also controls Changhe and Hanjiang. The company is a leading minivan maker and a national small motor vehicles source in China.
In 1998 a licenced Daewoo Tico and later a Pininfarina-designed minivan, called the Zhongyi was added to the line-up. The Mitsubishi Dingo was re-christened as the HFH 6390 Saima and is being assembled since 2000. Its engine is also locally produced at Harbin Dongan Automotive Engine Mfg Co., Ltd
At the 2002 Beijing Motor Show the company introduced the Lobo (treasure on the road) which went into production in November. This Pininfarina designed minicar hails a new era in the history of Hafei.
The company occupies an area of 1,050,000 m2 and has a floor space of 350,000 m2. Further upgrading accomplished enabled welding, painting and final assembly operations to support two production lines running in parallel with an annual output of 200,000 units.
Hafei Motor has 5,000 employees including 104 senior engineering and administration staff and more than 600 middle engineering and administration staff, who are primarily engaged in development, production, marketing and sales of Songhuajiang small vehicles in series and their parts and spares.

Avic II unit sells Hafei Auto stake

AviChina Industry & Technology, a maker of civilian aircraft and motor vehicles, said it will transfer its stake in Hafei Auto for almost 900 million yuan (HK$847 million) to one of its vehicle engine-manufacturing units to lower costs.

The unit of China Aviation Industry Corp II, or Avic II, will sell its entire 74.81 per cent stake in carmaker Hafei Auto to its Shanghai-listed subsidiary Harbin Dongan Auto Engine, which is 70.01 per cent owned by AviChina, for 898.95 million yuan.

Dongan Auto will take full control of Hafei Auto by acquiring the remaining 25.19 per cent equity interest from China Aero, Dongan Group, Catic (China National Aero-Technology Import & Export ) and Shenzhen Shenhang Avionics for 302.69 million yuan.

AviChina said in a statement that while Dongan Auto manufactures car engines and Hafei produces mini-sized vehicles and sedans, it will be more efficient to combine their certain management functions, given that both companies are based in Harbin.

This would increase management efficiency, lower administrative and general costs, improve profitability of the vehicle business, as well as shorten the cycle for research and development of new vehicles, it said.

To finance the acquisition of Hafei Auto, Dongan Auto is proposing to issue eight rights shares for every 10 existing shares.

Assuming the rights issue price is determined at a 10 to 40 per cent discount to the average closing price a month before the announcement, Dongan Auto will raise one billion to 1.51 billion yuan from the rights issue.

The transactions are awaiting approval from AviChina shareholders.