Changan said yesterday it will take over the auto assets of Aviation Industry Corp. of China, which will in turn receive a 23 percent stake in Changan. They include two mainland brands and joint ventures with Suzuki and Mitsubishi.

"That's pretty significant," said analyst John Bonnell. "It's a step toward what they're trying to get done."

Financial terms were not released, but Xinhua News Agency said the deal was one of the biggest in recent years in China's auto industry.

ADVERTISEMENT

Beijing is trying to orchestrate mergers among China's dozens of small automakers to create big, efficient producers. But progress has been slow and the effort faces opposition from city or provincial governments that own carmakers and are reluctant to see local producers close.

A government plan released this year calls for building up two to three large automakers with annual production capacity of two million vehicles. China's auto sales are the world's highest this year. But domestic brands are small, while the country's biggest producers are General Motors and Germany's Volkswagen.

Sales soared by 72 percent last month from a year earlier to 1.2 million vehicles. Total sales so far this year amounted to 10.9 million vehicles, compared with 8.6 million in the United States.

Changan is China's fourth-largest automaker, with sales so far this year of one million vehicles and an 11 percent market share. The acquisition of Harbin Hafei Automobile Industry Group, Jiangxi Changhe Automobile and the Suzuki and Mitsubishi ventures would push it into third place.

AVIC is a top mainland military contractor. Getting rid of its auto assets would allow AVIC to focus on aerospace.

ASSOCIATED PRESS