FAW-Brilliance Auto merger off – Liaoning governor

BEIJING, March 5 (Reuters) – Chinese state auto group FAW
Group’s intended move to take over smaller rival Brilliance Auto
is now dead, a senior Chinese official said on Saturday.

For years, FAW, the China partner of Volkwagen (VOWG.DE: Quote, Profile, Research) and
General Motors (GM.N: Quote, Profile, Research), has been seeking an equity deal with
Brilliance Auto, based in the northeastern province of Liaoning.

When asked chances of Brilliance becoming an acquisition
target of FAW, Liaoning governor Wang Min said: “We have already
worked out a development plan to have 3 million vehicle
manufacturing capacity in Liaoning by 2015. There will be no
such deal any more.”

Beijing has been pushing for major consolidation of its
highly-fragmented auto market now crowded with more than 100
players.

But many local governments are not strongly motivated as
auto has been a pillar industry that offers both jobs and fiscal
income for the locality.
(Reporting by Fang Yan and Ken Wills; editing by Keiron
Henderson)