(Yicai) April 9 -- Avatr Technology, the smart electric vehicle brand of China's Changan Automobile, rebutted a rumor that it has reached a deal to acquire struggling peer HiPhi. 

The rumor that Avatr has finalized an agreement to absorb HiPhi is false, the Chongqing-based firm said yesterday after it began circulating on social media the same day.

HiPhi will resume operations at the end of this month, the rumor also said. Chinese financial news outlets also reported that the pair are close to or have reached an agreement. 

HiPhi suspended auto production for six months in February. Yicai subsequently learned that a labor supplier to the carmaker laid off more than 100 staff who worked at its Yancheng plant.

Human Horizons Technology, which owns the HiPhi brand, was set up in 2017. HiPhi has launched three models but has failed to achieve a breakthrough in sales.

In February, HiPhi founder Ding Lei said a number of firms had shown interest in acquiring or investing in the company. Some of its workers make ends meet still by selling HiPhi cars via livestreams after production and salary payments were halted.

Ding visited Changan Auto in late February. Reports said Changan would buy a 51 percent stake in HiPhi, but Zhu Huarong, its chairman, told Yicai that the two companies were in talks and there was still some way to go before reaching a deal.

Changan Auto owns 41 percent of Avatr, which is also backed by tech behemoth Huawei Technologies. Founded in July 2018, it develops vehicles based on the CHN architecture, a smart platform co-developed by Changan Auto, Huawei, and Contemporary Amperex Technology.

Editor: Martin Kadiev