China's State-run Dongfeng Motor Corp and Japan's Nissan Motor Co have launched a much-anticipated joint venture (JV) in Wuhan, capital of Central China's Hubei Province.

Yesterday's official launch came nine months after Dongfeng and Nissan reached an agreement to set up the JV, known as the Dongfeng Motor Co Ltd.

Dongfeng Motor Co Ltd is the biggest Sino-foreign automobile JV so far in terms of investment and business scope.

The 50-50 operation has a registered capital of 16.7 billion yuan (US$2 billion).

The parent Dongfeng, one of China's top three automakers, has devoted almost all of its businesses except its car and engine JV projects with other foreign partners - including French PSA Peugeot Citroen, Japan's Honda and Cummins of the United States - to the new venture.

The JV aims to produce 550,000 automobiles annually by 2006, including 330,000 Dongfeng-brand commercial vehicles and 220,000 Nissan-brand passenger cars.

The JV will also produce engines and spare parts.

Dongfeng Motor Co Ltd has a workforce of 74,000 and will start operation on July 1.

The JV's board chairman will be Miao Wei, general manager of the parent Dongfeng, and Katsumi Nakamura, the head of Nissan's operations in China, will be president.

The venture's first passenger car, the Nissan Sunny, will roll off the assembly line later this month, Carlos Ghosn, president of Nissan, said yesterday at the launching ceremony in Wuhan.

The 2-litre Sunny will be produced at the JV's plant in Guangzhou, in South China's Guangdong Province.

"Nissan will introduce another five new passenger models into the joint venture by 2006," Ghosn said.

Sources from Dongfeng said the Guangzhou plant will produce the Teana - Nissan's newly launched luxury sedan - next year.

Nissan, 36.8 per cent owned by French automaker Renault, will bring its Cefiro sedan into the JV's plant in Xiangfan, in Hubei Province, later this year.

It will also produce buses and light trucks in Dongfeng's existing manufacturing base in Xiangfan.

"We will study the possibilities of Renault's participation in our co-operation with Nissan," Miao said.

Both of China's other auto giants, the First Automotive Works Corp based in Northeast China's Jilin Province and the Shanghai Automotive Industry Corp, have also set up two or more JV projects with foreign partners, such as Volkswagen, General Motors and Toyota.

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