Shanghai Automotive Industry Corp.'s (Group) initial public offering is not likely to happen this year, or even next year, said Chen Xianglin, the chairman of the group, Sunday.

Chen, who made the comments to Dow Jones Newswires on the sidelines of the World Industrial and Commercial Organization summit in Beijing, declined to give further details on the planned IPO.

Shanghai Automotive is one of China's three major State-run automakers and the partner of General Motors Corp. (GM) and Volkswagen AG (VOW.XE).

A recent report in the 21st Century Business Herald said that Shanghai Automotive, also known as SAIC, planned to go public in both Hong Kong and New York in January to raise US$6 billion.

Earlier this year Morgan Stanley (MWD), Merrill Lynch & Co. (MER) and Deutsche Bank AG (DB) were selected to lead SAIC's IPO, a source familiar with the deal had told Dow Jones Newswires.

SAIC has previously said that there was preliminary consideration to list the "whole group." But it has never clearly said when or where the group would be listed, or how much money would be raised.

Chen also said that he expected SAIC to produce 600,000 sedans this year, slightly higher than last year. Last year, SAIC sold 597,000 sedans, according to its annual report. Last year's production data was not immediately available.

Chen said that China's macroeconomic tightening measures "had quite a big impact on the auto sector" as it also reduced consumer lending for automobile purchases, resulting in slower car sales growth this year.

That's resulted in a buildup of inventory with some automakers, and has led to price wars in China.

But Chen said that he expected auto prices to stabilize soon as the prices of Chinese cars were already approaching international price levels.

(Shenzhen Daily September 22, 2004)