China’s leading auto manufacturer, the Shanghai Automotive Industrial Corporation (SAIC), announced Thursday it had officially separated from the Chery Auto Co., Ltd, officially undoing a merger that occurred fewer than four years ago.

According to a statement by SAIC, the split has been officially approved, and the company has transferred its 20 percent share of Cherry to other stock holders.

The statement also said that Chery Auto has been granted permission to make cars independently, a qualification which stimulated the company to join SAIC more than three years ago.

Chery also obtained advantage of market promotion and sufficient component supply when the small company, then only allowed to produce auto parts, allied with SAIC.

Friction rose between the two carmakers as Chery saw drastic sales growth and possibly undermined the market share of Volkswagen and General Motors, two giant strategic partners of SAIC.

The disputes were intensified when Chery introduced a well-received compact model QQ more than one year ago and triggered an intellectual property fight with GM over its Spark model. The argument was covered extensively in newspapers.

(Shenzhen Daily October 8, 2004)