GM establishes JV with FAW to make light trucks

General Motors said yesterday it has agreed to set up a light commercial vehicle production venture with major Chinese automaker FAW Group, with an investment of 2 billion yuan ($293 million).

The 50-50 joint venture, based in Changchun, Jilin Province, will make light-duty trucks and vans, GM said in a statement.

"For us in China, this is an important complement to the rest of our portfolio," Kevin Wale, president and managing director for GM’s China operations, told reporters in a conference call.

Wale said the deal will enable GM to expand.

"We are well established in passenger vehicles and mini commercial vehicles and we haven't had a presence in the truck segment. Adding a truck portfolio rounds that out," Wale said.

The venture will use two existing FAW plants in Changchun and the city of Harbin, also in the northeast, with combined annual capacity of roughly 90,000 vehicles, he said.

A greenfield plant, currently under construction in Harbin, will add 100,000 units of capacity by the end of next year, he said.

Vehicles made at the venture will carry the FAW brand and will focus on supplying the China market, but they could be exported under a GM brand through the Detroit automaker’s global network in the future, Wale said.

GM is making Buick, Chevrolet and Cadillac models at its flagship China venture with SAIC Motor Corp.

It also makes minivans, pickup trucks and the Spark compact car in a three-way tie-up with SAIC and Liuzhou Wuling Automobile.

SAIC-GM-Wuling sold 87,925 vehicles in July, up 90.7 percent from a year earlier, helped by Beijing’s stimulus initiatives to support the industry, including subsidies for buyers in rural areas.

GM, which now holds 34 percent of SAIC-GM-Wuling, has been seeking to raise its stake in the venture.

It was reported earlier this month that GM had secured an initial deal to take over Liuzhou Wuling Auto's 15.9 percent stake for roughly 300 million yuan ($43.9 million).

Wale reiterated the US automaker's interest in raising its stake in the venture but made no further comment on the issue.

Reuters