General Motors China and state-owned automaker FAW Group Corp. launched a 2 billion yuan joint venture Sunday 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 over 100,000 vehicles. That is expected to double by the end of 2010, GM China Group President Kevin Wale told reporters in a conference call.
Plans call for building a new assembly plant in Harbin, 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 the northeastern Chinese city of Changchun, 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 southwestern China's Yunnan province, a facility owned by FAW-affiliate Hongta Yunnan Automobile Manufacturing Co. Ltd., and at Harbin Light Vehicle Co. Ltd. in the northeastern city of 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," Nick Reilly, GM executive vice president, 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.
Wale said he said he expected GM's commercial vehicle sales to reach 80,000 to 90,000 this year and to rise further next year.