Nissan Motor Co. formally announced Thursday that it has formed a comprehensive alliance with Chinese auto giant Dong Feng Automobile Co. to set up a joint venture in China next spring that will produce a full range of cars and commercial vehicles.
Nissan will invest 120.4 billion yen in the venture, which will be named Dongfeng Motor Co. and equally owned with Dong Feng.
Nissan also plans to spend between 20 billion yen and 30 billion yen through 2006 to develop cars for the Chinese market.
The new firm will begin manufacturing Nissan’s Sunny compact next year and other five car models by 2006. Its sales goal for 2006 is set at 550,000 units, comprising 330,000 commercial vehicles and 220,000 cars.
The deal is expected to help Nissan expand its business in China and better compete with rivals such as Toyota Motor Corp. and Honda Motor Co., which are also gearing up to expand their production volumes in the country.
Dong Feng was established in 1969 and is one of three major carmakers in China. It posted car sales of 265,000 units in 2001. Its main business focus is on trucks and buses, and the Chinese company owns a 17 percent share, or 194,000 units, of China’s commercial-vehicle market.
The joint venture, which will become a full-lineup carmaker and competitive in the Chinese market, will offer mid- to long-term financial stability to Dong Feng, Nissan officials said.
To run the joint venture effectively, Nissan will provide management expertise, including marketing, procurement and production efficiency knowhow, while the Chinese carmaker will spin off its commercial vehicle operations to the joint venture and offer its production bases.
All cars manufactured by the new firm will be marketed under the Nissan brand, while all trucks and buses will carry the Dong Feng brand.
Nissan, which began selling cars in China in 1972, currently markets the Bluebird, the Sunny, and the Cefiro cars as well as a pickup truck and the X-Trail sport utility vehicle in the country. It posted annual sales in China of 34,000 units in 2001.
Nissan’s entry into the rapidly growing Chinese market is part of its plan to boost global sales to 3.6 million units from 2.6 million units within three years.
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