The first joint venture vehicle company in China is running heavy losses and could go bankrupt, the sector's first casualty of accession to the World Trade Organisation, according to an official newspaper.
The China Economic News said Beijing Jeep, of which DaimlerChrysler owns 42 per cent and firms under the Beijing city government the balance, was seriously short of capital, with sales below target and few new models in a market in which prices had fallen sharply since WTO entry last December.
The firm was set up in 1984 between state-owned companies in Beijing and American Motors, which was later acquired by Chrysler Corp, which has since merged with Daimler-Benz.
Last year the firm planned to sell 12,000 vehicles, up 20 per cent from the 2000 level, the newspaper said.
But in the first eight months sales were only 3,111, down 25 per cent from the same period in 2000, and its market share fell below 1 per cent to 0.64 per cent. This was a far cry from its best year, 1995, when it sold 80,000 vehicles with income of 5.75 billion yuan (about HK$5.38 billion) and net profit of 350 million yuan.
In August and September 2000, it held a special directors' meeting which decided to inject US$226 million into the firm to import new machinery and develop products but the plan has not been put into practice.
While the money is no problem for DaimlerChrysler, the Beijing city government and Beijing Auto Industry, the Chinese partner in the joint venture, have not been able to fund it.
