SHANGHAI Automotive Co Ltd (stock code: 600104) agreed to pay 1.48 billion yuan (US$192.2 million) to buy out both a commercial vehicle maker and an auto parts producer to accelerate development of commercial vehicles.

The Shanghai-listed unit of Shanghai Automotive Industry Corp, China's largest car maker, will be the sole shareholder of Shanghai Wanzhong Car Components Co Ltd and Shanghai Huizhong Automotive Manufacturing Co Ltd after the deal, the company said in files to the stock exchange yesterday.

Both ventures were equally-owned by Shanghai Auto and Shanghai Industrial Holdings Co before.

"The purchase will power our integration in commercial vehicles and enhance the development of core car components," the company said in the statement, "We aim to lift our competitiveness in both areas."

Commercial vehicles such as trucks and mini vans are the priority for SAIC during its 11th Five-year plan that ends in 2010.

It plans to significantly expand production and sales to match with its leading position in passenger cars.

SAIC's Huizhong now produces nearly 6,000 trucks and 10,000 minivans every year.

The Chinese partner of Volkswagen AG and General Motors Corp, received government approval to team up with Iveco to buy controlling stake in a Chongqing-based truck maker last year.

Truck sales surge

The deal will enable it to turn out 40,000 heavy duty trucks annually once construction of a plant is completed next year.

China's commercial car maker topped two million units last year with growth of 14 percent.

Sales of heavy duty trucks even surged 31 percent to 307,296 units, fueled by China's infrastructure build up and rapidly expanding logistics industry.

Shanghai Auto is also expected to invest 210 million yuan to set up a technical center for commercial vehicles, according to China Business Post earlier.

SAIC injected its core assets in Shanghai Volkswagen and Shanghai General Motors Co Ltd into Shanghai Auto under a back-door listing plan last year.