Article Abstract:
German automaker Volkswagen AG is experiencing difficulty in holding its top position in China's automobile industry due to difficulties with its production partners and the entry of new players in China's auto industry. Volkswagen's partnership with First Auto Works of Changchun, China, has not developed into a profitable partnership like the company's partnership with Shanghai Automotive Industry Corp. The glut in China's car industry has resulted in low prices which reduced profit margins for Volkswagen. Added to Volkswagen's woes are the weak distribution network of First Auto, and Shanghai Auto's move for independence from Volkswagen.
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Article Abstract:
The Chinese automobile industry's predicted growth has failed to materialize because of stringent regulations on vehicle registration. Chinese police departments charge as much as $12,000 to register automobiles and restrict their use to only certain days of the week. In addition, China has revised its state-bank credit system to discourage companies from giving automobiles as perks to employees. However, the crackdown on automobile ownership and use is limited only to areas which have limited transportation infrastructure such as Beijing.
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Article Abstract:
Industry observers report that China's First Autoworks has acquired Shenyang-based Jinbei Motor Co. in a recently-concluded $70 million deal. Analysts view the acquisition, which is the largest of its kind in the country, as an effort to consolidate China's automotive sector and bring it up to par with international competitors. The acquisition is expected to have significant implications for foreign automakers who have existing deals with the two Chinese firms.
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