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Shanghai Automotive Industry Corp. announced yesterday it will partner with Isuzu Motors Ltd. and General Motors Corp. to tap growing demand for heavy trucks in China.
The three automakers signed a letter of intent last week to seek cooperation opportunities, said Xue Hao, spokesman of Shanghai Automotive, although he wouldn't disclose details of the agreement.
"The projects are still in discussion, and no investment plan can be announced so far," Xue said on Wednesday.
Earlier, Isuzu said it's in talks with Shanghai Automotive to set up a joint venture to make trucks in China, Bloomberg News reported, quoting company president Yoshinori Ida.
The company plans to start making 10,000 eight-ton trucks a year in 2003 through the venture, with output rising to 70,000 by 2005.
The General Motors Corp. affiliate wants to tap growing demand for larger commercial vehicles in China as it reorganizes operations to return to profitability by March 2004.
Isuzu owns a 7.4 percent stake in Qingling Motors Co., where it already makes trucks, and a 13 percent stake in Jianing-Isuzu Motors Co., a pickup-truck venture.
Industry officials suggest the new heavy-truck ventures may be set up in Shanghai - a prediction based on Shanghai Automotive's existing truck plant in the city.
Shanghai Automotive, China's third largest automaker, is the country's No. 1 sedan maker but currently produces only a limited number of heavy trucks.
"China's rising investment in infrastructure projects and the central government's 'Go West' strategy will stimulate the demand for trucks," Xue said. "We hope to benefit from the promising market."
This year, heavy-truck sales in China are expected to top 195,000 units, compared with 147,000 units in 2001.
The First Automotive Works Group and Dongfeng Motor Corp., the country's two largest car makers, have grabbed almost 80 percent of the domestic heavy-truck market.
DaimlerChrysler AG, the world's largest truck maker, is negotiating with First Automotive to establish a 50-50 heavy-truck venture in China, which will have an annual production capacity of 50,000 units.
Volvo Truck Corp. has won government approval for a 1.6-billion-yuan (US$193 million) heavy-truck venture with China National Heavy Duty Truck Corp.
Shanghai Automotive has been claimed by GM as its important strategic partner in the Asia Pacific region.
(English.eastday.com November 15, 2002)
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