General Motors China and state-owned automaker FAW Group Corp (中國第一汽車) launched a 2 billion yuan (US$293 million) joint venture yesterday to make light-duty trucks and vans, initially for the fast-growing Chinese market.
GM said the joint venture will use two existing factories affiliated with FAW and have a capacity of more than 100,000 vehicles.
That is expected to double by the end of next year, GM China Group president Kevin Wale told reporters in a conference call.
Plans call for building a new assembly plant in Harbin, Heilongjiang Province, he said.
China is a key growth market for GM, which is expanding here despite its difficulties in the US market.
“Light trucks and vans have a significant role in China and other parts of the world,” Wale said. “Adding trucks rounds out our vehicle portfolio in China. It’s really a key focus for future growth.”
The 50-50 joint venture, based in Changchun, Jilin Province, where FAW is also based, will make FAW-branded vehicles for the Chinese market, GM said in a statement. The venture might make GM-branded vehicles for export later, but the focus for now is on meeting demand in China, Wale said.
Production will be at the existing factories in Yunnan Province, a facility owned by FAW-affiliate Hongta Yunnan Automobile Manufacturing Co Ltd (一汽紅塔雲南汽車), and at Harbin Light Vehicle Co Ltd (一汽哈爾濱輕型汽車) in Harbin, GM said.
It said the two companies will conduct research and development, exports and after-sales support as well as vehicle production.
“Our new joint venture combines the expertise of two industry leaders in a partnership that benefits both,” GM executive vice president Nick Reilly said in a statement.
“It will address demand in China and other markets for high-quality, affordable products in one of the industry’s most robust segments, while complementing the portfolio of products that GM and FAW currently offer,” Reilly said.
Discussions on the venture began in early 2007 and it obtained regulatory approval last month, GM said.
FAW, originally known as First Auto Works, was founded in 1953 and began production in 1956. It sold 1.53 million vehicles, including sedans, vans and trucks, last year.
GM’s sales in China jumped 38 percent in the first half of this year, helped by strong demand for its minivans and other small vehicles. The automaker sold more than 100,000 vehicles a month in China from January to June for a total of 814,442, a record for any half year, the company said. That compares with sales of 1,094,561 GM vehicles in China for all of last year.
Adding truck production will help expand the company’s exposure in one of the few major markets that continues to grow.
“These are quite different customers and quite different products,” Wale said.
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