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SCMP Reporter

Fiat of Italy and Honda Motors of Japan have made fresh moves to cement their positions in the mainland car industry.

On Thursday, Fiat launched a US$99.8 million joint venture in Changzhou city, Jiangsu province to assemble large- and medium-sized buses, reported the China Daily  yesterday.

Honda Motor, through its Tianjian subsidiary, has acquired 'principle approval' from regulatory authorities to form a joint venture with Shenzhen-listed Hainan Sundiro Motorcycle.

Both companies are attempting to strengthen their footholds in a crowded market.

United States-based General Motors, with a US$1.52 billion facility in Shanghai, is a key player in China's fledgling car-making industry.

Volkswagen of Germany and various Japanese and European car-makers have also established a sizeable presence.

Fiat's new joint venture is the result of four years of talks with Chinese partner Changzhou Changjiang Bus, according to the China Daily.

The 50-50 joint venture will assemble Fiat's Iveco-brand large- and medium-sized buses.

It will further redesign Changjiang Bus's products with Iveco technology and parts.

Iveco is the world's second-largest bus manufacturer after Mercedes-Benz. But this would not spare the joint venture from competition from Mercedes-Benz, Volvo and Daewoo Motors which have similar operations in the mainland, China Daily  said.

'We have already recognised increasing competition in the Chinese bus market,' Fiat Iveco's chief executive Giancarlo Boschetti was quoted as saying at the joint venture's launch.

Initial capacity would fall between 6,000 and 7,000 units annually.

Although output would vary in line with market demand, officials from the State Economic and Trade Commission revealed its bus production would increase to 80,000 units by 2005.

The optimism was echoed by Mr Boschetti.

'Demand for large- and medium-sized buses in China will increase significantly with extension of expressways and fast development of the southern and western regions of the country,' he said.

Iveco also has a US$300 million commercial van joint-venture with Nanjing's Yuejin Automobile Group.

Honda's proposed joint venture would have registered capital of US$99.56 million, according to the China Securities  newspaper.

Honda would own 50 per cent of the company. For that, it plans to invest about 178 million yuan (about HK$166 million), and will pay an extra 113 million yuan in cash to acquire a 10.86 per cent stake from Hainan Sundiro.

The A-share company would inject five wholly owned motorcycle and marketing subsidiaries into the joint venture.

It has also pledged intangible assets, such as access to its procurement and sales network, brand name and patents, for a 47.33 per cent stake in the joint venture.

The share capital will later be expanded to absorb a Sino-Japanese joint venture motor-engine producer under Hainan Sundiro, the newspaper said.



Fiat, Honda deals aim to cement mainland standing