The prospects of Chinese companies acquiring some of the assets of the troubled Big Three US automakers seem to be gathering momentum.

Analysts, however, said that Chinese companies should exercise caution when it comes to acquiring US assets.

"It's very risky for Chinese automakers to acquire US auto assets and brands now," said Dong Jianhua, an auto analyst with Southwest Securities.

Dong said Chinese automakers are still not ready to take the overseas plunge. "The acquisitions might push the Chinese firms into hot water as they could be beset with financial problems in the future," he said.

Hui Yumei, an analyst with Sinotrust, a leading automobile industry research company, agrees with Dong. "The US auto giants are only divesting their burden and not the profitable and competitive units. Chinese enterprises should be prudent."

Chang'an Auto is believed to be in talks with Ford for taking over the Swedish luxury brand Volvo, The National Business Daily reported yesterday quoting an anonymous Chang'an source. UK's Mail had earlier reported that Ford might sell Volvo to SAIC Motor Corp, China's biggest automaker.

A Volvo source said the two companies had in their course of discussions during the Guangzhou auto show last month focused on local production of Volvo's new models.

Ford Motor (China) Ltd officials told China Daily that "we are re-evaluating strategic options for Volvo Car Corporation, up to and including a possible sale. It will take some months to assess all of our available options."

"Chang'an should pay more attention to employee, distribution and research and development other than the payment for the brand if they really want to buy Volvo," said Hui.

"I am worried about how Chang'an can maintain the value of Volvo brand after the acquisition."

There were also reports yesterday that Chery intends to buy assets from Chrysler, with the help of a 10 billion yuan loan from the Export-Import Bank of China.

Dongfeng Motor Corp, China's third biggest carmaker, was also reported last month to be considering asset buys from General Motors Corp.

(China Daily December 10, 2008)