Chang'an Motor, China's fourth biggest producer of automobiles, and the Japanese partner Suzuki Motor, plan to add a further 2.96 billion yuan (US$364.98 million) in their joint venture within the next two years to expand production capacity and introduce new models, according to a company executive.

The new investment in the joint venture, or Chang'an Suzuki, will be 1.36 billion yuan (US$167.69 million), said Yin Jiaxu, president of Chang'an Motor.

The venture in southwest China's Chongqing Municipality will build a new 200,000-unit plant, Yin said.

Chang'an Suzuki, formed in 1993, now has an annual production capacity of 200,000 cars.

The venture, which now makes compact cars such as Alto, Gazelle and Swift, plans to introduce two new models next year, he said.

Chang'an holds a 51 percent stake in the venture, and Suzuki and the Japanese industrial group Nissho Iwai Corp jointly control 49 percent.

However, the venture's sales fell by 17.32 percent year-on-year to 62,786 cars in the first eight months of this year, according to statistics from the China Association of Automobile Manufacturers.

Analysts blamed the venture's sales slump on the rising market competition and many local governments' limited support of small-sized cars.

The planned new investment in the venture is a strong signal that Chang'an and Suzuki are still cementing their ties, although the Chinese party has formed a so-called strategic alliance with US automaker Ford Motor, according to analysts.

Chang'an and Ford set up a joint venture in 2001 in Chongqing.

In 2003, Chang'an and Ford announced a joint investment of more than US$1 billion to expand in China.

The plant in Chongqing now has a maximum production capacity of 200,000 cars a year and makes Fiesta, Mondeo and Focus sedans.

Ford and Chang'an are also building a new 160,000-unit car plant in Nanjing, capital of East China's Jiangsu Province, which will start to assemble Ford and Mazda-branded cars in 2007. Ford controls 33.4 percent of Mazda.

Chang'an, Ford and Mazda also plan to collaborate to build an engine plant in Nanjing with an annual capacity of 350,000 units.

Besides assembling foreign brands, Chang'an is speeding up its development of own-brand cars.

Yin said Chang'an would launch two own-brand cars during the second half of next year.

Chang'an currently focuses own-brand production on mini vans.

Own-brand vehicles will eventually account for at least 50 percent of Chang'an's total automobile output, he said earlier.

The group's sales grew by almost 7 percent year-on-year to 409,500 vehicles in the first eight months of this year, ranking No 4 in China after First Automotive Works Corp, Shanghai Automotive Industry Corp and Dongfeng Motor Corp, according to statistics from the China Association of Automobile Manufacturers.

Chang'an aims to double its annual output to more than 1 million vehicles by 2007.

(China Daily September 28, 2005)