Foton, Sichuan Tengzhong to form special vehicle JV

Source: Gasgoo
[08:21 November 26 2010]
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Beiqi Foton Motor Co., Ltd., announced Thursday it plans to invest 20 million yuan ($3 million) to create a joint venture with a subsidiary of Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd. to make special vehicles, Shanghai Securities News reported Wednesday.

Foton, partly owned by Beijing Automotive Industry Holding (BAIC), will hold a 25 percent stake in the joint venture, "Sichuan Tengzhong Futian (Foton) Special Purpose Vehicle Co., Ltd.", which will be headquartered in Shifang City, Sichuan province, with a registered capital of 80 million yuan.

China's largest commercial vehicle producer said Tengzhong's subsidiary Huarui Specialized Vehicle Ltd. will spend 52 million yuan to take a controlling 65 percent stake in the new company and the rest 10 percent will go to a shareholder appointed by Tengzhong.

Through collaboration with a regional special-vehicle manufacturer, Foton expects to strengthen local productivity, to save logistics and sales costs, and to expand the market share of its Auman heavy-duty trucks in the southwest market. Besides, it hopes to further improve its industrial layout, to meet the rising market demand in the region, to improve its brand awareness and thus enhance its sales in the southwest region.

In addition, Foton signed September 26 a strategic cooperation contract with Tengzhong on a special vehicle project. With a total investment of 200 million yuan, the project will have an annual capacity of 5,000 vehicles and contribute annual sales of 1.5 billion yuan after completion.

Foton also signed cooperative agreements with the Shifang Government to build its southwest vehicles and parts production base in Shifang City within five to ten years. The initial phase of this project will cost Foton 500 million yuan, will be able to produce 80,000 light-duty trucks and machineshop cars and is scheduled to be completed before the end of 2012. The whole project will cost 3 billion yuan.

Separately, Tengzhong earlier attempted to acquire Hummer from GM, but failed in getting approval from the Chinese government at the beginning of this year.