Dongfeng Motor Corp, China's third-biggest automotive group, recently signed a contract with Taiwan's Yulon Motors Corp to make passenger vehicles on the mainland.

The two companies formed a 50-50 joint venture based in the eastern city of Hangzhou with an initial registered capital of 1.55 billion yuan. Total planned investment is 3.4 billion yuan.

The venture will have an annual production capacity of 120,000 vehicles and 120,000 engines, with a line-up including sport-utility vehicles, multi-purpose vehicles, sedans and electric-powered vehicles.

All will be under a new brand - Luxgen - whose intellectual property right is jointly held by Dongfeng and Yulon.

The first Luxgen product is expected to go on sale in mid 2011.

The joint venture is the first business project between China's mainland and Taiwan since the two sides signed the Economic Cooperation Framework Agreement last June.

Analysts said the project gives Yulon a strong foothold in the Chinese mainland, the world's top vehicle market.

Yulon's subsidiary, China Motor, has a mainland passenger vehicle joint venture with Fujian Motor Industry Corp.

Dongfeng, partner of Honda, Nissan, PSA Peugeot Citroen and Kia, aims to move 2.22 million vehicles this year, up from 1.90 million units last year.

It plans to up its sales revenues to 290 billion yuan this year from 256.4 billion yuan in 2009.

China Daily

(China Daily 10/11/2010 page19)