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JAC joins rush toward 'green' vehicles

By Han Tianyang (China Daily)
Updated: 2010-08-16 11:10

Inside a JAC plant in Hefei, Anhui province. One of China's leading truck makers, it produced its first passenger car in 2008 - a move analysts said was to prevent consolidation with Chery, also based in the province. [Hu Weiguo / For China Daily]

Plans 50-50 joint venture with controversial former head of Brilliance Auto

BEIJING - Domestic truck maker Jianghuai Automobile Co (JAC) announced last week that it will produce new-energy vehicles in a 30 billion yuan ($4.41 billion) joint venture with a foreign-funded company, the latest Chinese automaker to make a foray into clean vehicles.

According a recent JAC statement filed with the Shanghai Stock Exchange, the company signed a framework agreement on Aug 9 with Tianjin Zhengdao Stock Investment & Management Co to establish a 50-50 joint venture at JAC's home base in Hefei, capital of Anhui province, with a registered capital of 700 million yuan.

Total investment in the partnership will be around 30 billion yuan, with an annual capacity of 1 million vehicles, 1 million powertrains and 12 million kWh of lithium-ion batteries in the next eight years, the statement said.

With new-energy vehicle development now one of the hottest topics in China's motoring industry, the news received wide attention.

China's Ministry of Industry and Information Technology just completed a draft plan for the development of energy-saving and new-energy vehicles that calls for the central government to offer more than 100 billion yuan to support the sector over the next decade and to foster three to five key new-energy vehicle manufacturers, said recent Chinese-language media reports.

JAC is among the many automakers in China eyeing the huge potential government investment, analysts said.

Industry insiders also believe the JAC deal is an effort to protect itself from a merger with Chery, the largest automaker in Anhui province.

The Anhui provincial government reportedly wants to form an even-larger auto group by consolidating Chery and JAC as each has advantages. Chery is China's largest auto exporter and among the top 10 in domestic sales, while JAC is a leading truck maker.

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Unwilling to merge with Chery, JAC started making passenger cars several years ago, including its first sedan introduced in 2008.

The company, founded in 1964, leads the light-duty truck segment as well as the bus chassis sector. It was listed on the Shanghai Stock Exchange in 2001.

The other partner in the potential new joint venture - Tianjin Zhengdao - also makes the story compelling.

A subsidiary of Hong Kong-listed Hybrid Kinetic Group Ltd - previously called Far East Golden Resource Group Ltd - it is run by Yang Rong, former chairman of Brilliance China Automotive Holdings Ltd, which is now the Chinese partner of BMW.