The announcement was made by the German-US auto giant on Friday in Beijing.

Analysts said the move was another bold step following an agreement with the firm's Chinese partner, Beijing Automotive Industry (Group) Corp, to pump US$226 million into their joint venture at the end of last September.

"Grand Cherokee will have a rosy future on the Chinese market with a mounting demand for SUVs," said Michael Meinert, director of marketing, sales and service at the joint venture.

Analysts predicted SUV demand on the home market will double in 10 years from the current level of around 100,000 units.

Meinert said the joint venture planned to manufacture about 1,000 Grand Cherokees this year.

"The launch of Grand Cherokee will reinforce our product line-up," said joint venture President An Qingheng.

The joint venture, in which DaimlerCrysler holds 42.4 per cent of the stake, has a production capacity of 85,000 old Cherokees and BJ2 jeeps a year.

Grand Cherokees come with 4-to-4.7-litre engines, which meet European II emission standards. The government says all vehicles in the country must meet the emission standard by 2005.

Imported Grand Cherokees have debuted on local markets in Beijing, Chengdu and Guangzhou.

Prices are from 590,000 yuan (US$71,085) to 700,000 yuan (US$84,340) in China, compared with US$29,000 to US$35,000 on the international market.

Although Grand Cherokee appears to be a top-notch luxury SUV brand in China, it still faces increasing competition from its rivals, analysts said.

Grand Cherokee's main competitors are the imported Toyota Land Cruiser and Mitsubishi Pajero, and the domestically made General Motors Chevrolet Blazer and Isuzu Rodeo, made in Chongqing, analysts said.

GM launched Chevrolet Blazers, which sell from 245,000 yuan (US$29,520) to 375,000 yuan (US$45,180), in its joint venture, Jinbei GM in Shenyang, last month.

Beijing Jeep will also begin to produce a new generation BJ2 jeep during the third quarter of 2002, the company said.

From 2003, the joint venture will develop a new model every year to satisfy changing local markets.

DaimlerChrysler and Beijing Automotive Corporation have decided to extend the joint venture's term by 30 years to 2033.

(China Daily 01/15/2000)