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All systems go in Albury

On a roll: China's Geely will unveil this familiar-looking new model, the Geely GE, at the Shanghai motor show, opening up another possible avenue for DSI's six-speed transmission.

Geely and SsangYong keen to get Aussie Drivetrain Systems transmissions

1 Apr 2009

THE new owner of Australia’s only automatic transmission plant, China’s Geely Automobile Holdings, will take significant volumes of transmissions in coming years as it rapidly expands its range of vehicles in the Chinese market.

And SsangYong of Korea, the company that caused Albury’s Drivetrain Systems International (DSI) to plunge into receivership in February, is also keen to resume purchasing DSI products.

SsangYong has asked that DSI resume supply of six-speed units for its SUVs and is set to pay $500,000 to DSI so it can continue development work on a front-wheel-drive six-speed unit to be used in its new C200.

The acquisition comes at a crucial time for Geely, which has signalled its intention to reveal 22 new models this year, starting at Shanghai motor show on April 2.

The headline product will be a “mini Rolls-Royce” called the GE (Geely Excellence). Other models to be revealed include the GT (Geely Tiger) sportscar.

“We are pretty happy with the result,” said DSI receiver Stephen Longley, of PricewaterhouseCoopers, referring to the sale price for DSI, which will be a minimum of $47.4 million.

He said the sale to Geely was strategically important for DSI and augured well for the future.

“Now it is owned by a manufacturer who wants it to be an industry player and not just supply them,” he said. “It also will give DSI guaranteed volumes.” Mr Longley said Geely had indicated during the sale negotiations that it intended to take about 60,000 units a year within two years.

That is about twice what the plant is doing now. Current capacity is 200,000 units a year but this will rise when the new front-wheel-drive transmission line is completed.

Mr Longley said he was treading carefully with SsangYong until the company was given approval to restructure by the Korean courts. That decision is due on May 22.

 center imageLeft: SsangYong's C200.

SsangYong is able to keep building vehicles now, but Mr Longley has told the company he is reluctant to supply until all the old debt has been paid by Ssangyong.

“SsangYong are asking us to restart production of the six-speed transmission for two-wheel drive and four-wheel drive use, but we are not prepared to do it unless they pay us up front, before we make them.” He is also confident SsangYong will reimburse DSI for development work already completed.

In a statement to the Hong Kong Stock Exchange, the 45-year-old chairman and major shareholder of Geely, Li Shufu, said DSI represented a good investment opportunity for Geely, which made about 220,000 vehicles in 2008, including exports.

“The design capabilities of DSI, the Albury manufacturing facility and the associated intellectual property will enhance (Geely’s) technological and manufacturing capabilities.

“It is the intention of Geely to increase production volumes of the Albury facility, which will enhance its manufacturing efficiency and cost competitiveness.” He stressed that DSI would continue to supply other manufacturers, as well as Geely’s internal needs.

The acquisition of an automatic transmission plant is a major step forward for Geely, as about 80 per cent of all vehicles sold in China are automatic.

Read more:

Albury transmission-maker saved for $47.4 million

SsangYong back into gear

Albury transmission plant set for sale this month

The Road to Recovery podcast series

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