GM, China FAW set light-truck, van joint venture

Aug 30, 2009, 12:06 p.m. EST

GM, China FAW set light-truck, van joint venture

By William Spain, MarketWatch

CHICAGO (MarketWatch) — General Motors China and China FAW Group Corp. have established a joint venture to produce light-duty commercial vehicles in the world’s fastest-growing automotive market, the companies said Sunday.

The new 50-50 joint venture between will be based in Changchun, in Jilin Province, and will produce trucks and vans, along with some research and development, exports and after-sales support.

It will include Harbin Light Vehicle Co., Ltd., and FAW’s share of Hongta Yunnan Automobile Manufacturing. Products will be branded FAW in China, while the joint venture "leaves room for the creation of GM derivatives."

The total investment in the deal is estimated at 2 billion yuan, or $293 million.

It "combines the expertise of two industry leaders in a win-win partnership," said Nick Reilly, president of GM’s international operations, in the announcement. "It will address demand in China 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."

The companies started talking about cooperation in the development and production of light commercial vehicles more than two years ago, signing a memorandum of understanding and conducting due diligence starting in November of 2007.

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