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GAC Fiat Chrysler Automobiles Co., Ltd. (GAC FCA)The bankruptcy liquidation case has attracted widespread attention recently. The second auction of its factory in Changsha and its affiliated buildings, machinery and equipment and other core assets started on August 5. As no one bid, the auction ended on August 6 and ended in failure.

Previously on July 20, GAC Fiat Chrysler Changsha Factory held its first auction with a starting price of 1.915 billion yuan, but it failed because no one bid.For the second auction, GAC Fiat Chrysler set the starting price at 1.532 billion yuan, which was 383 million yuan lower than the first auction price.

GAC Fiat Chrysler Automobiles is a subsidiary of Fiat Group (nowStellantis GroupA joint venture established by ) and GAC Group in March 2010, it has launched a number of SUV products in China. Its sales peaked in 2017 and then began to decline.From 2018 to 2021, GAC Fiat Chrysler's sales volume fell from 125,200 vehicles to 20,100 vehicles.

In addition to the continuous decline in sales, GAC Fiat Chrysler Automobiles is also burdened with high debts. As of September 30, 2022, GAC Fiat Chrysler Automobiles (unaudited) had total assets of 7.322 billion yuan, total liabilities of 8.113 billion yuan, and an asset-liability ratio of 110.80%. In October 2022, GAC Fiat Chrysler Automobiles filed for bankruptcy with the court because its actual assets could not repay all debts and it had basically stopped operating, and officially entered bankruptcy proceedings.

GAC Fiat Chrysler Automobiles has two major production bases in Changsha and Guangzhou. Its Guangzhou plant has announced the suspension of production in 2021.It was later taken over by GAC Aion and transformed into Aion's production base.The GAC Fiat Chrysler Changsha plant being auctioned has a planned production capacity of 164,000 vehicles in the first phase.The auction not only includes land and building plants, but also various machines and equipment. As early as 2022, there were reports that Leapmotor, BYD and others were interested in taking over the factory, but there was no further news later.

A person working in the legal industry pointed out that bankruptcy auctions are different from acquisitions. Assets are usually sold at a discount. The buyer will consider whether the price is appropriate and whether the relevant production lines of the bankrupt company are able to support production. According to the general procedures of bankruptcy auctions, there are three auction opportunities for bankrupt assets. If the three auctions fail, the court will sell the assets or use the assets to pay off the debts if the creditors are willing to accept. Judging from the current situation, the price may be further reduced in the third auction.

Compared with taking over factories through bankruptcy auctions, a more common method in the automotive industry is acquisition. Vehicle manufacturers that need to expand production or have other needs can quickly increase production capacity by acquiring factories with idle production capacity from other automobile brands, or they can acquire factories by acquiring other companies.

At the end of last year, after obtaining independent production qualifications, NIO acquired some factory assets of JAC Motors, which had previously manufactured for it, for 3.158 billion yuan. The GAC Mitsubishi factory, also located in Changsha, was also taken over by GAC Aion to expand production capacity after Mitsubishi ended its local production in China.

Considering the current intensified competition in the domestic auto industry, auto companies may not seek to expand production blindly. It is still unknown whether someone will take over the GAC Fiat Chrysler plant at this time.It is worth noting that there are also cases where non-automotive buyers have taken over auctioned assets of automotive companies.

Last year, Baoneng Automobile, which attracted much attention, had its Qoros Automobile production line listed on the judicial auction platform at the end of 2022 at a price of 122.9 million yuan, but was later withdrawn. At the end of April this year, the asset was auctioned again at a price of 7.3863 million yuan, and was finally auctioned by Shenzhen Fengyu Enterprise Management Co., Ltd. at a price of 6.6476 million yuan in the second auction in May. According to Tianyancha information, the company is engaged in software and information technology services and has invested in many automobile sales and supply chain companies in Guangdong.