China Motor project approved

China Motor Corp (中華汽車), the nation's second-largest automaker, yesterday said that its second joint-venture project in China had received the green light by the Chinese government, further establishing its foothold in the world's largest auto market.

The establishment of DaimlerChrysler Vans (China) Ltd (DCVC) -- a venture between China Motor, German-American maker DaimlerChrysler AG as well as China's Fujian Motor Industry Group (福州汽車) -- was approved by Chinese authorities yesterday, China Motor said in a statement.

"The Chinese government has been stringent in approving new automobile ventures. Therefore the green light obtained by the DCVC project shows that the venture is highly executable and has good development prospects," the statement said.

Fujian Motor will take a 50 percent stake in DCVC, located in Fuzhou in Fujian Province, while DaimlerChrysler, the world's fifth-largest automaker, will have 33 percent and China Motor has the remaining 17 percent.

The 200 million euro (NT$8.5 billion) joint-venture will focus on Vito/Viano multi-purpose vehicles and Sprinter commercial trucks.

"These are higher-end vehicles and we expect procurement from Chinese government agencies. The higher selling prices will help boost our revenues there in the future," Yang Ming-te (楊明德), a China Motor's public relations official, told the Taipei Times yesterday.

The approval for DCVC was delayed for a year, as China Motor had intended to get the authorization in late 2005, with commercial production slated for early next year.

The delay means that factory construction will only be finished in the middle of next year, with mass production scheduled to kick off late in the year, Yang said.

Production capacity is expected to hit 40,000 vehicles each year, the company said.

"This will complement our vehicle offerings in the Chinese market. DCVC will also serve as our platform to supply cars from China to other Asia-Pacific markets in the future," it said.

China's rapidly growing auto industry saw sales of 5.77 million vehicles in the first 10 months of last year, up 26 percent from the same period the year before, according to China Association of Automobile Manufacturers (中國汽車工業協會) data.

In view of the nation's limited market size, local vendors have been eyeing the massive market across the Taiwan Strait.

China Motor set up its first joint venture in China, South-East Motors Co (東南汽車), in 1995. Other shareholders include Fujian Motor and Japan's Mitsubishi Motors Corp.

South-East Motors' sales last year are estimated at 67,000 units, a level similar to 2005, Yang said.

"We saw a better second half last year as more vehicles were introduced in China, which boosted monthly capacity to 6,000 units," he said, adding that the first half was slow with some months only seeing production of 3,000 units.

Affected by lackluster local car sales, China Motor posted revenues of NT$32.5 billion (US$1 billion) for the first 11 months, down 33 percent from the same period last year.

Its shares closed up 1.2 percent to NT$30 on the Taiwan Stock Exchange last Friday, the last trading day of the year.

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