Anhui Jianghuai Automobile Co Ltd, a leading bus chassis manufacturer in China, Wednesday said there are no plans for a merger to take place between its parent company and Chery Automobile Co Ltd within the next three months, the Shanghai Daily reported.

The State-owned Assets Supervision and Administration Commission in Anhui Province has not started studying the possibility of a merger, so there will be no equity transfer or new share sale, the company said in a statement filed with the Shanghai Stock Exchange.

Chery spokesman Jin Yibo also denied plans for a merger between the two companies.

Speculation of a merger between Jianghuai and Chery arose at the beginning of this year after the Chinese government announced that it would encourage mergers among domestic auto makers to reduce oversupply and boost competition.

In May, the provincial government in Auhui also announced a similar plan to encourage six of its car makers, including Chery and Anhui Jianghuai, to consolidate.

Anhui Jianghuai is based in Hefei, the capital of Anhui Province and produces 450,000 vehicles per year, including light trucks and multipurpose vehicles. Its flagship models are the JAC Refine and an MPV similar to the Hyundai Starex. The company earlier said it planned to build a plant at the Acu port complex in Rio de Janeiro State.