(Reuters)
Updated: 2007-07-30 15:58

The State parent of Dongfeng Motor Group Co, China's third-biggest automaker, has set up a passenger vehicle subsidiary, paving the way for more aggressive development of the company's own-brand cars.

Dongfeng, which makes cars in tie-ups with Nissan Motor, Honda Motor and PSA Peugeot Citroen, unveiled its first self-developed sporty car late last year, and is awaiting regulatory approval to start mass production.

It did not say how much it would spend to develop and make more cars under its badge in a statement issued this week.

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South China Morning Post on Saturday put the investment at 7.6 billion yuan ($1.01 billion), without citing sources for the figure. But the newspaper cited local Chinese media as saying the firm planned to begin assembling self-branded cars in September.

After churning out Buicks, Passats and other foreign models in tie-ups with global auto giants for years, many home-grown players are setting their sights on an own-brand strategy, hoping to wean themselves off reliance on foreign technology.

FAW Group Corp, a China partner of Volkswagen AG and Toyota Motor, plans to spend 13 billion yuan in the next eight years to develop cars under its own brand.

Shanghai Automotive, which runs ventures with General Motors and Volkswagen, announced a massive bond issue plan this week to fund the development of sedans -- including the construction of facilities capable of making 270,000 sedans and 320,000 engines per year -- with an estimated cost of 21.4 billion yuan.

Guangzhou Honda, the Japanese auto maker's tie-up with state-run Guangzhou Automobile Group, also unveiled a 2 billion yuan plan earlier in the month to develop non-Honda branded sedans, becoming the first foreign car venture to develop cars bearing its own badge.

Unlike Shanghai Auto, Dongfeng Motor, planning to roll out its own-brand sedans in 2009, handles its own-brand vehicle project at the group level, company executives told Reuters previously.

It would inject the assets into the listed Dongfeng only after the own-brand sedan business becomes profitable, they added.