Dongfeng, Yulon to jontly make SUVs in Hangzhou

Shanghai, June 26 (Gasgoo.com) Dongfeng Motor Group said that its subsidiary in Hangzhou has bought a 20% stake in Luxgen Motor Co., the mainland unit of Taiwan's Yulon Motor Co., Shanghai Securities News reporetd today. They will form a joint venture to make SUVs and other vehicles.

It is unclear how much Dongfeng Hangzhou Motor Co. has paid for its stake in Yulon's Luxgen Motor Co., which is also based in Hangzhou, Zhejiang province. Dongfeng, Yulon and Hangzhou city have signed a strategic cooperation deal to form a new company in the city for making commercial vehicles and passenger vehicles.

Luxgen will introduce a sport-utility vehicle (SUV) model to the new company first and multi-purpose vehicles later, the newspaper said. The Dongfeng-Yulon venture will launch its first vehicle, a 2.0-liter SUV model, by October 2010.

The joint venture is expected to have an annual capacity of 540,000 vehicles, to produce 300,000 Dongfeng commercial cars and 240,000 Yulon passenger cars a year. The JV project may get regulatory approval by the end of this year.

Luxgen (Hangzhou) Motor Co was established in 2007 by Yulon Motor Co and Zhejiang Zhongyu Holding Group with a total investment of 4.6 billion yuan ($680 mln).