General Motors is in talks with China's FAW Group to establish a joint venture for producing commercial vehicles, the two parties confirmed on February 9.

Workers assemble a minivan at a General Motors plant in China. The US firm is now in talks with FAW Group for its second venture in light commercial vehicles segment. [China Daily]

"We are actively discussing the details of the partnership, and will release all the information once we get the government approval (for the venture)," said Gao Yuan, director of FAW's news center.

A General Motors spokesman confirmed that the two companies, which have never shaken hands before, have already registered a name with the State Administration for Industry and Commerce for the planned venture.

He also said that the venture will manufacture light commercial vehicles, but the cooperation discussion is still "far to the end".

Both the companies refused to disclose more details and Gao told China Daily that all the particular information about the cooperation Chinese media reported were "inaccurate".

General Motors was reported over the weekend to have set up the joint venture with FAW-Hongta Yunnan Manufacturing Co, FAW's light commercial vehicle unit, to produce light trucks at FAW's headquarters Changchun, Jilin province.

Currently, General Motors has cooperated with China's biggest automaker SAIC Group on light-truck and minivan manufacture in Liuzhou, Guangxi Zhuang autonomous region.

The venture, SAIC-GM-Wuling, reported a record sales of 75,168 units in January and took the top slot in light commercial vehicle sakes in China for the third consecutive year after selling 650,508 units.

The company also set an ambitious plan to sell 700,000 vehicles this year.

Since 2007, General Motors has been involved in talks with Chinese commercial vehicle makers like Jiangling Motors and Anhui Jianghuai Automobile Co Ltd (JAC), all of which failed.

"China's light vehicles market has been saturated in the recent years with major manufacturers like Foton, Dongfeng, JAC and Jiangling. General Motors has no competitive edge in engines and cab technologies, which are the core elements in commercial vehicle manufacture," said Dong Jianhua, an auto analyst with Southwest Securities.

"US players' products and technologies also do not cater to Chinese customers' taste and favor," he said.

Last year, China sold more than 1.1 million units of light trucks, a 10 percent growth over the previous year.

Once the joint venture is established, General Motors will be FAW's first foreign partner in commercial vehicles segment as FAW has partnerships with Volkswagen AG and Toyota Motor in passenger car production.

(China Daily February 10, 2009)