Ford Motor Co will further increase its stake in China's Shenzhen-listed Jiangling Motors Corp Ltd, the No 2 US automaker said yesterday, after its shares rose to 30 per cent from 29.96 per cent.

The Michigan-based group spent HK$1 million (US$128,200) buying 0.04 per cent of Jiangling, or 321,400 Hong Kong dollar-denominated shares on the open market, Jiangling said in a statement yesterday.

Jiangling's shares were reopened yesterday following a three-day suspension.

Ford now remains the No 2 shareholder of Jiangling - based in East China's Jiangxi Province - after Jiangling Motor Holdings Corp, which holds 41.03 per cent.

Jiangling Holdings is a 50-50 joint venture launched in May between local government-owned Jiangling Group and Ford's other Chinese partner Chang'an Motor - the nation's fourth biggest automaker.

"We plan to further increase our stake in Jiangling through buying shares on the open market or legal person shares. But it will be within the limitation of China's policy," said Kenneth Hsu, the spokesman of Ford China Group.

In July, Jiangling said in a statement that it would offer Ford an option to acquire another seven per cent of its stake in three years.

According to China's auto industry policy, stakes of one of the domestic shareholders in a listed auto enterprise must be bigger than the combined shares of all foreign shareholders.

Shanghai Automotive Industry Corp, the Chinese partner of General Motors (GM) and Volkswagen, also have 3.01 per cent of Jiangling as its No 3 shareholder.

Hsu said that Ford's collaborations with Jiangling would continue to focus on commercial vehicles.

Jiangling started to produce Ford Transit wagons in 1997.

Zhang Xin, an analyst with Guotai & Jun'an Securities Co, said: "Apparently, Ford hopes to get a bigger say in Jiangling and build a strong synergy with Jiangling and Chang'an to boost its presence in China in both car and commercial vehicle segments."

"It's necessary for Ford to beef up efforts in China's commercial vehicle segment, which enjoys higher profit margins than the car segment," Zhang said.

Ford formed a car joint venture with Chang'an in West China's Chongqing Municipality in 2001.

Earlier this year, the two automakers also started to build a second plant in East China's Jiangsu Province to produce Ford and Mazda brand cars as part of their joint investment of US$1.5 billion announced in 2003.

However, Ford now lags far behind many other global automakers in China, such as GM and Volkswagen, because it is a latecomer to the world's third biggest auto market in terms of local car production.

(China Daily August 12, 2005)