Zonda plans $1.6b stake sales for expansion

Zonda Bus Group, the first Chinese coach maker to mass- produce pure electric buses, plans to raise more than 10 billion yuan ($1.6 billion) through stake sales over the next five years.

The money will be used to finance an expansion project in which it has set its sights on an annual output of 20,000 buses and grabbing a 20 percent market share, said a company executive.

Zonda got the green light in July from the Ministry of Industry and Information Technology to become the first company in China to commercially manufacture pure electric buses, and is expected to launch a project to produce 5,000 units annually in Jiangsu province within three years.

Zonda will invest 2 billion yuan in the project, which is expected to generate an output value of 10 billion yuan, including 1 billion yuan in tax revenues and 1 billion yuan in profit, said Xu Lianguo, chairman of Zonda Bus' parent, Zonda Group.

He added that Zonda hopes to invest more than 10 billion yuan over the next five years to have an annual production of more than 20,000 buses.

"By then, we hope to have 20 percent of the domestic market share," said Xu.

He added that Zonda had received the government's new energy vehicle subsidy of 50,000 yuan per electric bus in 2011. By the end of July, Zonda had received orders worth 160 million yuan for its electric vehicles.

Xu said that the company hoped to fund its huge investment by selling all or a part of its stake in Zonda Bus' subsidiaries Yancheng Zhongwei Passenger Bus Co Ltd, Beijing Zhongda Yanjing Automobile Co Ltd and Nanjing Zhongda Jinliang Double-Decker Bus Manufacture Co Ltd.

According to Xu, Zonda has invested 1.1 billion yuan in the development of pure electric buses over the past 12 years. Its electric bus has applied for 21 patents.

In 2010, Tianjin Traffic Group purchased 50 Zonda pure electric buses for the Summer Davos meeting in the city.

During the 12th Five-Year Plan (2011-15), the country requires 480,000 buses. However, total annual bus production in China is currently only around 60,000 units.

Moreover, the nation's latest blueprint for the sector, released by the State Council in July, set a target of producing and selling 500,000 energy-efficient and alternative-energy vehicles annually by 2015, with the figure rising to 5 million by 2020.

And for the new energy bus sector, China needs about 30,000 to 40,000 vehicles every year to replace outdated traditional buses.

Over the next 10 years, China will invest 140 billion yuan to support the new energy vehicle industry, as it aims to ease the country's heavy dependence on imported oil, cut emissions, and speed up the restructuring of its automobile sector into a more environmentally sustainable model. The blueprint will greatly encourage automakers to transfer their focus to green automobiles.

lifangfang@chinadaily.com.cn

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