Chang Feng (Group) Co., Ltd., one of the country's top automakers, intends to abandon its complete car cooperation with the domestic telecommunications firm, Ningbo Bird Co., Ltd. (SHSE: 600130).

Early this year, the Qiling sedan assets of their joint venture has been injected into Chang Feng (Group)'s listed automobile subsidiary, Hunan Changfeng Motor Co., Ltd. (SHSE: 600991).

After the divorce, Ningbo Bird will wave a farewell to its 3-year expansion in the domestic vehicle market, but it can continue participating in the engine project as a strategic investor, said people with the direct knowledge of the matter.

As a matter of fact, some experts is not shocked by this divorce scheme, because they know that the global financial crisis causes much negative influences on China's automobile market and Ningbo Bird has lost its fund advantage.

The Chinese automobile industry kept an explosive growth in 2006, when the mobile carrier wanted to seek new profit-making resources and Chang Feng (Group) expected for the self-developed brand upgrade with a strong fund support.

Therefore, the carmaker agreed to build a 50-50 joint venture with Ningbo Bird's subsidiary, Chongqing Bird Technology Co., Ltd. The headquarters of this new JV is settled in the central Chinese city of Changsha, Hunan Province, and its production base is lying in Yongzhou, another city in the province.

In March 2008, the JV launched its first car model, the Qiling sedan, but the sales was broken-down, due to some defects of this product and the financial turmoil worldwide. In addition, it had to face the internal competition with Changfeng Motor.

Analysts estimated that Chang Feng (Group)'s withdrawal would make the performance of Ningbo Bird worse in the near future. From January to September 2008, its aggregate losses reached CNY 47.45 million, and the company was predicted to be red in the entire 2008.

At the 2007-end, Chang Feng (Group), Ningbo Bird, and Morningside Group (Holdings) Ltd. of Hong Kong co-founded Hunan Changfeng Power Co., Ltd., approved by the National Development and Reform Commission (NDRC), China's macro-economy regulator.

Changfeng Power is embarked on the manufacturing of 1.6L, 1.8L, and 2.0L CF-series engines, and its annual output is expected to hit 150,000. On January 16, 2009, the first batch of engines rolled off the production line.

Owning total assets of CNY 5.54 billion and more than 3,600 employees, Chang Feng (Group) has set up two sizable vehicle production bases and four auto parts manufacturing bases in Changsha, Yongzhou, Hengyang, and Huizhou.

(USD 1 = CNY 6.84)