HONG KONG (Reuters) -- Chinese carmaker BAIC Motor, part-owned by Daimler, plans to raise up to $2 billion in a Hong Kong initial public offering, lifting its target as China's auto market enjoys solid growth.
A year ago, in the early planning stages, BAIC Motor's target was closer to $1 billion. The listing is expected in the second quarter of 2014, sources familiar with the plans say.
This year's expected strong showing in China's auto market will be driven by an anticipated array of economic stimulus measures, as well as robust demand for cars in smaller cities in interior regions, according to industry executives and analysts.
"China's auto industry is in the midst of a recovery, and is likely to grow 8 to 10 percent a year over the next few years," said Liang Yonghuo, an analyst at Haitong International Research Ltd. in Shenzhen.
BAIC Motor is the passenger-car unit of state-owned Beijing Automotive Group (BAIC). In November, Daimler sealed a deal to buy a 12 percent stake in BAIC Motor for 640 million euros ($871 million) to boost its China presence and secure a foothold before the long-expected IPO.
The listing could fund Beijing Automotive Group's ambition to join the ranks of SAIC Motor, Dongfeng Group and FAW Group as the government tries to consolidate the industry and form globally competitive companies.
The parent of BAIC Motor and Daimler didn't return requests for comments on the IPO.
Beijing Automotive Group's sales jumped 19 percent last year, exceeding 2 million vehicles for the first time. It has been actively expanding through acquisitions as it aims to almost double annual output capacity to four million vehicles by 2015. The fast-growing group last year acquired two small local players, and said it was seeking to buy "a mid-to-high-end European auto brand" to accelerate global expansion.
BAIC Motor has joint ventures with both Daimler and Hyundai Motor and also sells its locally created brand, Senova. It offers a wide spectrum of vehicles, ranging from premium sedans and budget cars to SUVs and commercial vehicles.