A subsidiary of Chinese automaker FAW Group has been in financial trouble for several months, having suspended production and delayed the payment of employee salaries, according to insiders.

Yicai learned from workers that FAW Jilin halted production around June and has not paid them salaries since August. The staff hopes that the parent firm's leadership will formulate a solution for the ongoing issues, they added.

FAW Jilin’s product development and new energy transitions have failed to keep pace with the market, resulting in serious operating difficulties, sources close to the company told Yicai.

FAW Jilin was founded in 1980 and became a subsidiary of FAW in 1990. It mainly produces passenger cars, commercial vehicles, and special-purpose vehicles. Sales of its main passenger car brand Xenia have been declining due to the intensified competition in the sports utility vehicle market.

Between 2016 and 2018, FAW Jilin accumulated losses of nearly CNY3 billion (USD411.8 million). As a result, the automaker launched a mixed-ownership reform in 2018. Shandong Baoya New Energy Vehicle invested CNY1.5 billion for a 70.5 percent stake in the firm, with FAW’s stake dropping to 29.5 percent.

FAW Jilin sells a variety of car models, including gasoline-powered, electric, and hybrid ones. However, it has not released any sales data in the past years.

（Picture: Veer）