Dongfeng Motor Group, China’s third largest automaker, is rumored to be negotiating to buy out domestic competitor Hafei Automobile Group, China Auto News reported, citing an unnamed industry source. If accurate, the acquisition follows the amalgamation of Shanghai Automotive Industry Corp Motors and Nanjing Automobile in December. The Chinese government is encouraging such horizontal integrations to boost the sector's competitiveness against foreign players. Zhou Mi, a spokesman for Wuhan-based Dongfeng Motor, from central China’s Hubei province, did not deny the possible deal, but said he had not been told about it. Hafei could not be reached for comment. Industry watchers said access to Hafei’s facilities in northern China – particularly in Harbin, the far northeastern Heilongjiang province where it is based – will help Dongfeng enrich its product line-up. Hafei is currently capable of producing 400,000 vehicles and 450,000 engines a year.

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