Chinese Auto Deal Not The Last

One of China's leading auto makers, Geely Automobiles, announced on March 28 that it would pay up to AUD58mn million (US$40.22mn) to acquire Australian parts supplier Drivetrain Systems International (DSI), as part of its ongoing bid to diversify internationally and away from low-priced autos. DSI has a long-standing supply relationship with beleaguered US giants Ford Motor and Chrysler, and as such has been hit hard by the ever-worsening predicament of the latter two amid the global downturn (see 'In The News'), seeking bankruptcy protection in February owing more than US$80mn to staff and investors. Geely said that the company will continue to supply the international market while its products and technology will also be brought into China, and that the deal would expand its own current product line while also improving the gearbox production capacity that will be essential to its attempts to be more globally competitive. DSI already supplies parts to Ssangyong Motor, and CFW believes that increased exposure to the Chinese market will be no bad thing for a company currently witnessing unprecedented turmoil among its major US clients.

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