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High court slams brakes on Chana vehicles in SA

CHANGAN South Africa, the local importer and distributor of vehicles produced by Chinese state-owned vehicle manufacturer Chana Auto Company (ChangAn), has been placed in final liquidation in the South Gauteng High Court.

The liquidation has left the owners of almost 10 000 Chana entry-level cars and bakkies sold into the market and its network of 23 independent dealers without any support.

Former Changan SA chief executive Teresita van Gaalen said yesterday that the liquidation had also left about 25 employees in the distributorship business and about 100 in the supply chain and dealerships unemployed.

Van Gaalen said the liquidation would not lead to the collapse of all the Chana dealerships because “the problem had been festering for some time” and dealers increasingly realised they had to rely on other products, including used vehicles, to survive.

The South Gauteng High Court approved an application to place Friedshelf 1100, trading as Changan SA, in final liquidation last week. The application was brought by Rand Asia Trade Finance, which owned 100 percent of the shareholding in the company.

Van Gaalen attributed the voluntary liquidation of the company, despite massive efforts to try and keep it afloat, to its high debt levels since a previous importer of the brand was “rescued” in 2009 by the Johannesburg branch of China Construction Bank.

Changan SA revealed plans for the brand in South Africa in July 2009, including the planned investment of $80 million (R655m) in the country within the next five years to establish a production plant with an annual capacity of more than 50 000 units.

About 90 percent of the firm’s more than R90m debt was owed to the Johannesburg branch of the China Construction Bank, Van Gaalen said.

She added that the company’s recovery process had been significantly hampered by the massive debt burden incurred prior to her appointment 17 months ago despite successful efforts in the past year at stabilising the business.

“My heartache is for the highly committed employees who find themselves unemployed at this difficult time in our sector and the fragile economy. Unfulfilled promises have left the customer base of close to 10 000 vehicles here in South Africa and the dealer organisation of 23 highly committed small or medium enterprises without support,” she said.

However, the Chinese supply chain across a number of the brands allowed for broader access to parts and spares for after-sales consumption, she said, adding that Changan wanted to continue trading in South Africa.

In a letter written by Changan International Corporation last week, the group said it remained committed to the South African market and was “doing everything possible to re-start operations as soon as possible”.

It said Changan was trying its best to restore service levels and the supply of parts as a top priority. “An emergency plan in progress will oversee the supply of parts and service is [to be] restored as soon as possible.”

The corporation confirmed it was seeking a new strong long-term partner and a stronger distributor for the brand in South Africa.

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