Cars

Dongfeng drives new energy strategy

By Gong Zhengzheng and Xiao Han (China Daily)
Updated: 2010-08-16 11:23

Partner with Yulon

Dongfeng will also produce new-energy cars in its planned joint venture with Yulon Group, Taiwan's biggest automaker.

The company announced last week that the National Development and Reform Commission approved the plan at the end of July that envisions production facilities in Hangzhou with annual capacity of 120,000 passenger vehicles and an equal number of engines in its first phase.

The joint venture will have a lineup of SUVs, MPVs, cars and purely electric vehicles. The first product is likely to hit the market in the middle of next year, said Dongfeng.

The 50-50 partnership with registered capital of 1.55 billion yuan will at first produce an SUV or MPV with the nameplate Luxgen, a current Yulon brand, said recent media reports.

As one of the biggest auto groups in China and partner of Nissan, Honda, PSA Peugeot Citroen and Kia, Dongfeng could be a strong collaborator for Yulon to tap the mainland market.

Dongfeng sold 1.28 million vehicles in the first half this year and has a full year target to deliver 2.22 million units.

CEO of Yulon Group Kenneth Yen was quoted in local media reports as saying automobiles from Taiwan will get the opportunity to step on the global stage only by first entering the vast mainland market.

Fewer than 300,000 autos were sold in Taiwan last year compared with 13 million on the mainland.

Some analysts estimated that Yulon's new vehicle sales could surge to 150,000 units a year from a current 30,000 units through the huge market demand on the mainland, according to reports of Taiwanese media.

Opposing views say it will be difficult for a new and little-known brand like Luxgen to grab a share of the highly competitive Chinese auto market.