Small Chinese automakers to join hands for exports

GUANGZHOU --  An Indonesian company will sign contracts with a group of small Chinese automakers on July 10 to assemble right-hand-drive vehicles for the automakers and export the vehicles to Southeast Asia from 2010.

The cars will be distributed in a unified dealership network under a "China Motor" brand.

The contracts will be signed by Intiland Tbk, an Indonesian company whose core business is property development, and five Chinese automakers -- Hebei Zhongxing Automobile Co., Chongqing Lifan Holdings Co., Zhejiang Jonway Automobile Co., Zhejiang Gonow Auto Co. and Baoding Dadi Auto Industry Co.

Under the contracts, Intiland's China subsidiary -- Darma China -- and the Chinese automakers will jointly build a plant in Guilin city of Southwest China's Guangxi province to assemble right-hand-drive cars based on the current left-hand-drive models supplied by the automakers, says Darma China's chief executive officer Lucas Kwan.

In the plant, the stamping, welding and painting processes will be conducted collectively. To protect their technologies, the five automakers will each set up an assembly line inside the plant to assemble its cars.

Mass production is scheduled to start in mid-2010. The plant will have an output capacity of 100,000 units per year in the beginning. Kwan estimates the plant's initial output will be 50,000 to 60,000 units per year.

All companies involved will also set up a joint marketing company to build a distribution network and provide after-sales services in Southeast Asian countries.

The cars will carry both their own badges. They will also carry a unified "China Motor" badge in a "prominent" place, says Kwan.

Of the five small Chinese automakers, only Lifan makes sedans. The other four mainly make SUVs and pickups. In 2007, Lifan sold some 30,000 sedans. Sales of the other four companies were either about or below 10,000 units.

Kwan says the joint project will mainly produce SUVs initially. It will add other types of family cars to its product line-up in the future.

To improve fuel efficiency and reduce emissions of the adapted right-hand-drive vehicles, Kwan says they will re-engineer the engines of the cars so they can burn either gasoline or natural gas.

Kwan also says Thailand, Indonesia and Malaysia will be the main target markets for the right-hand-drive cars to be assembled in the Guilin plant.

He also confirms Darma China is currently seeking to involve more small Chinese auto manufacturers in the joint assembly and export project.