Chongqing Changan Automobile Co said it plans to raise as much as 4 billion yuan (US$586 million) by selling additional shares to help fund expansion of self-branded vehicles.
The nation's third-largest auto group will issue up to 20 percent of its currently 2.3 billion outstanding shares, according to its statement filed to the Shenzhen Stock Exchange yesterday.
The proceeds of the additional share sale would be part of a total of 4.37 billion yuan the firm has earmarked for various projects which include production expansion, upgrading small engines and strengthening engineering capability for self-owned cars.
Changan, the nation's major minivan maker and partner of Ford Motor Corp and Mazda Motor Corp, said 1.64 billion yuan will be used to increase the capacity at its minivan plant. Another 1.19 billion yuan will be invested in a vehicle test ground to enhance its engineering competence, the statement added.
Production expansion and developing self-branded vehicles are two top priorities for Chinese car makers after demand for small cars was fueled by stimulus measures the Chinese government launched. The incentives have been kept to boost vehicle consumption this year.
The car maker's sales in January more than tripled to 72,886 units from a year earlier. The robust sales followed a 64 percent surge in its vehicle sales last year to total 1.36 million units.