Chinese automaker Great Wall Motor Co. Ltd. plans to expand production of multilayer plastic fuel tanks and rubber parts, using some of the HK$1.6 billion (US$205 million) it expects to raise by selling additional shares.
Great Wall, China's largest privately owned automaker, said in filings to the Hong Kong Stock Exchange it wants to produce 300,000 of the multilayer plastic tanks a year. The company said plastic fuel tanks are expected to have 85 percent of the Chinese market in five years, because their light weight and flexibility reduces automobile weight.
The fuel-tank initiative is part of Great Wall's plan to establish a parts manufacturing base in its headquarters city, in Baoding, China, for making engines, gearboxes, axles and other parts. Great Wall said it wants to produce 400,000 vehicles a year by 2010 and expand its vehicle mix.
It also said it wants to expand its research and development, including employing what it called ``advanced production technologies in plastic multilayer fuel boxes.''
``The domestic partners of Sino-foreign [China-foreign] joint ventures in the automobiles and parts and components industry have always been perceived as not having control over the area of product development and core technology, and lacking initiatives in research and development and innovation,'' the company told the Hong Kong exchange.
Developing better multilayer tank technology has figured prominently in the plans of other Chinese auto industry firms.
Chinese supplier Yangzhou Auto Plastic Parts Co. Ltd. backed out of a proposed joint venture with Paris-based Inergy Automotive Systems last year, for example, partly because it felt it could develop plastic fuel-tank technology on its own. For rubber parts, Great Wall said it wants to expand production to 300,000 rubber parts a year, including seal strips, tubes, shock absorption blocks and others, for its own use and to sell to other vehicle makers in northern China.
It said demand for auto seal strips in China exceeded 490 million feet in 2005, and is estimated to top 820 million feet by 2010, with quality standards rising from Chinese consumer demand and the expansion of foreign firms into the country.
The company also said proceeds from the share sale would fund expansion of engine parts, to 200,000 units a year; gearboxes, to 200,000 units; and cast parts, to 80,000 units. The projects have been approved by China's National Development and Reform Commission, the company said.