SHANGHAI -- Changan Auto, Ford Motor Co.'s main partner in China, has won approval to raise $132.9 million in an additional share issue to fund production expansion, the company said on Wednesday.
Chongqing Changan Automobile Co. Ltd., which also makes compact cars with Japan's Suzuki Corp., said in March it wanted to issue up to 150 million yuan-denominated A shares domestically -- eschewing an overseas listing popular among local firms at the time.
Its stock would be issued from Wednesday to Aug. 26, expanding Changan's share base by 10 percent to 1.62 billion. Pricing would be announced after a public subscription, it said.
The money raised would be used to build a new assembly line to add 100,000 minivans annually to the company's output capacity, and to expand manufacturing to other parts of the country, the company said on Wednesday.
Ford and Changan Auto intend to team up with Mazda Motor Corp. on a planned car factory in the prosperous eastern city of Nanjing, China, with initial capacity for around 200,000 cars.
Multinationals such as Ford, General Motors, Volkswagen and Toyota Motor Corp. have unveiled plans to invest about $13 billion to triple capacity to some 6 million units by the end of the decade, prompting fears of a margin-sapping glut.
Underscoring that risk, growth in China's car sales is expected to slow to just 10 percent or 20 percent this year after sales nearly doubled to 2 million units in 2003.
Car sales rose just 1.6 percent in July from June to snap a three-month decline after Beijing clamped down on credit to curb bounding economic growth.
Changan Auto -- China's largest minivan-maker -- posted a 7.3 percent fall in second-quarter earnings as car sales slid.
Analysts say full-year earnings may grow 10 percent -- less than a previously expected 20 percent -- as a price war begins to bite.
GM and Volkswagen have embarked on a round of price cuts to stimulate sales in the face of a market slowdown.
Changan Auto's Shenzhen-listed hard currency A shares have fallen 40 percent since early April, when the government embarked on its credit-tightening campaign, vastly underperforming the market's 23 percent fall over the same period.