Dongfeng: China SUV JV with Honda

SHANGHAI, July 15, 2003; Reuters reports that Chinese automaker Dongfeng Motor Corp said on Tuesday it had agreed to set up a joint venture with Japan's Honda Motor Co (Tokyo:7267.T - News) to tap a small but growing market for sport utility vehicles (SUVs).

The proposed company, a 50-50 venture to be based in the central city of Wuhan, would produce 5,000 CR-Vs this year, an executive with the Chinese firm said.

"It's all been decided," the Dongfeng executive told Reuters, declining to reveal investment or targeted capacity. He added that a formal agreement had not been signed.

A Honda spokesman in Tokyo denied on Tuesday it was in talks with Dongfeng about setting up a JV.

Dongfeng Motor, one of the country's three largest vehicle makers, last month set up a $2 billion venture with Japan's third-largest car maker, Nissan Motor Co (Tokyo:7201.T - News), to make just over 500,000 cars and commercial vehicles a year by 2006.

Nissan said in February it had set up a separate SUV joint venture with Zhengzhou Light Automobile Works and China's flagship investment vehicle CITIC Holdings to build 10,000 Paladin SUVs a year.

Foreign carmakers in China have announced a near doubling of production to 2.3 million units by 2007 as car sales are growing at an annual rate of about 60 percent in the world's fastest growing major economy