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Production lines roll as auto giants team up

By Li Fangfang (China Daily)
Updated: 2009-08-31 07:42

Two leading automakers in China and the United States yesterday announced a multibillion-yuan deal to manufacture commercial vehicles.

FAW Group Corp and US-based General Motors (GM) have teamed up to establish FAW-GM Light Duty Commercial Vehicle Co Ltd.

The 50-50 venture is the first between the leading automakers and the first major international investment by GM since it restructured as New GM after filing for bankruptcy protection in the US two months ago.

The joint commercial vehicle firm is based at FAW's headquarters in Changchun, capital of Northeast China's Jilin province, and has registered capital of 1.2 billion yuan ($176 million) and total investment of 2 billion yuan.

The company is focused on the production and sales of light-duty trucks and vans, as well as research and development, exports and after-sales support.

Production began yesterday as the venture includes facilities FAW uses for Harbin Light Vehicle Co Ltd and Hongta Yunnan Automotive Manufacturing Co Ltd, said Nick Reilly, GM's executive vice president and president of GM International Operations.

Manufactured in Harbin, Heilongjiang province, and Qujing, Yunnan province, existing and future products will be branded FAW Jiefang in China, leaving room for the creation of GM derivatives in the near future.

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Capacity will reach 200,000 units per year, said Kevin Wale, president and managing director of GM China.

"We will first address the demand of Chinese consumers, then make the venture a valuable player in the global market for high-quality, affordable products in one of the industry's most robust segments, while complementing the portfolio of products GM and FAW offer," said Reilly.

"There is no other market in the world deserving our attention more than China. It sends an important signal of GM's ongoing commitment to China.

"China occupies more than 15 percent of the light truck market share in the world and it is expected to grow in the near future as China's economy rapidly develops."

Xu Jianyi, president of FAW, said he hopes the venture will claim the biggest market share in China's light commercial vehicle segment before expansion overseas.

"Light commercial vehicles will play a strategic role in China's urbanization and rural development," he said. "Our win-win cooperation is a proactive step in helping the Chinese government realize its plan of restructuring and further developing the automotive industry, broadening the market share of local self-owned brands."

According to FAW executives, the companies have been in talks over the deal since January 2007 and received approval from the Chinese government in July.

FAW already has partnerships with Volkswagen and Toyota in passenger car production, while GM has cooperated with China's SAIC Group on passenger car production in Shanghai and light truck and minivan manufacture in Liuzhou, Guangxi Zhuang autonomous region.