Dongfeng-Yulon JV launched in Hangzhou

Leading automakers on the Chinese mainland and Taiwan formally unveiled a new joint venture on Dec 14, the first major cross-Straits deal since September's adoption of the Economic Cooperation Framework Agreement (ECFA) to lower cross-Straits trade barriers.

The 50-50 partnership between Dongfeng Motor Corp and Yulon Motor is headquartered in Hangzhou, capital of East China's Zhejiang province.

Zhou Wenjie, an executive from Dongfeng, has been appointed chairman of the new Dongfeng-Yulon, while Jack Hsin-fa Wu, a top manager at Yulong, was appointed general manager.

Each side will invest 3.4 billion yuan to fund development and a factory that is now being built in Hangzhou's Xiaoshan Linjiang Industrial Zone. In its first phase, the facility will have a production capacity of 240,000 units, according to Zhou.

Plans call for Dongfeng-Yulong to make SUVs, sporty cars, multi-purpose vehicles, sedans and purely electric vehicles under the brand Luxgen, a name the company says combines "luxury and genius".

The first of the joint venture's eight planned Luxgen models will be an SUV expected to hit the market in the middle of 2011, Zhou told reporters.

The company will then unveil two new models every year as traditional cars and new energy vehicles are developed at the same time, Zhou said.

Coming back

Established in 1951, Taiwan's Yulon Motor is now the biggest auto group on the island with annual sales of 200,000 vehicles.

Yulon previously joined with Dongfeng Corp to form the Fengshen Motor Co to make passenger vehicles in 2000, but withdrew after Dongfeng linked up with Japanese carmaker Nissan.

"Backed by the power of Dongfeng and Yulon and benefiting from growing cross-Straits ties, Dongfeng-Yulon will become a great auto company within five years, " said Zhou.

"We hope to create a competitive Chinese auto brand in the global market," he told reporters.

The joint venture has already signed up 35 dealerships on the mainland.

It plans to have 60 dealerships when the first Luxgen model hits the market next year. More than 30 part suppliers have signed on to build facilities near the joint venture.

As well, parts from Taiwan now enjoy tariff reductions as a result of the ECFA.