(Yicai Global) July 30 -- Shares of Anhui Jianghuai Automobile Group slumped today after the Chinese carmaker better known as JAC Motors denied a media report that it may manufacture vehicles for electronics giant Xiaomi.

JAC [SHA: 600418] closed down 5.2 percent at CNY17.75 (USD2.75), after falling as much as 8.7 percent earlier in the day. The Shanghai Composite Index ended flat, down 0.4 percent.

The Hefei-based automaker said in a statement late yesterday that it could confirm that a report claiming it may produce vehicles for Xiaomi were untrue.

JAC has not had any talks with Xiaomi about car-making cooperation nor have they reached any intention to join hands on vehicle manufacture, the statement added.

36Kr's auto news site Auto-Time reported on July 27 that the Anhui State-owned Assets Supervision and Administration Commission is in contact with Xiaomi and intends to bring Xiaomi's car project to Hefei. JAC may make the cars, it added, citing sources.

The report quoted a company insider as saying that JAC has a mature original equipment manufacturer system, but its brand awareness is relatively weak.

But JAC has accumulated a lot of experience making cars for Chinese new energy vehicle startup Nio and Volkswagen. Xiaomi's first model is likely to focus on the market under CNY200,000 (USD30,950) and it will enter the battery swapping business, the report said.

Editor: Peter Thomas