By Tu Lei

Two Chinese companies declared Friday that they have completed the acquisition of Nexteer Automotive, a major auto parts supplier in the US, a move designed to tap core auto industry technologies by Chinese investors.

With an investment of $450 million, it is the largest overseas purchase by the Chinese auto parts industry to date.

The two companies behind the purchase are AVIC Automobile Industry Co, which is a subsidiary of the State-owned Aviation Industry Corporation of China, with a 51 percent stake, and Beijing E-Town International Investment & Development Co Ltd, which is affiliated with the Beijing municipal government.

Founded in 1906, Michigan-based Nexteer Automotive was bought by General Motors (GM) in 2009. It has more than 20 plants and three research centers around the world, with core steering and transmission system technologies, and a client list that includes GM, Ford Motor Co, and Volkswagen. 

With this purchase, AVIC Automobile Industry Co plans to spend $300 million to build a global research and development center, a production center and a new headquarters in Beijing within the next two years, and they predict annual output will be worth $1.5 billion – after production begins.

"The deal will help save time on independent research and development, and grab shares in high-end parts technologies," Lang Xuehong, deputy general manager of Beijing-based Automotive Marketing Solutions-Sinotrust International Information & Consulting, yesterday told the Global Times.

According to Lang, the auto parts industry in China lags far behind the vehicle production sector, although China has surged ahead of the US last year to be the largest auto seller in the world.

"The auto-parts market is expected to be worth 2 trillion yuan ($305.99 billion) by the year 2015.

However, 90 percent of the domestic auto-parts makers are focused on the low-end market, and the high-end market is almost (entirely) monopolized by overseas producers," Zhao Guibin, board chairman of AVIC Automobile Industry Co, was quoted as saying by the Chinese-language Beijing Daily Saturday.