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Hyundai Motor, South Korea's leading automaker, is adjusting its business strategy in China by forming a new joint venture with Jianghuai Automobile Co., Ltd. This move marks the end of an earlier partnership between JAC and Huatai Automobile, which had been active for over two years before entering a period of relative stability. However, the Anhui automotive industry remains dynamic, as Hyundai recently announced plans to collaborate with JAC to produce commercial vehicles in China.
According to the agreement, both companies will hold 50% stakes in the joint venture, with a total investment of $780 million by 2010. The new venture aims to achieve annual production capacities of 50,000 small commercial vehicle engines, 10,000 buses, and 90,000 trucks by that time. While the news has generated interest, Jianghuai Automobile has responded cautiously, with officials stating that no official agreement has been signed yet. A spokesperson said, “JAC has not entered into a formal joint venture agreement with Hyundai Motor at this point.†However, they did not rule out the possibility of future collaboration.
The relationship between JAC and Hyundai dates back to 1998, when JAC’s subsidiary began producing Hyundai passenger cars through technology transfer. Over three years, more than 1,000 units were sold. In 2001, the two companies expanded their cooperation, introducing the H1 compact commercial vehicle, known as Rui Feng. The model was mass-produced the following year and generated 900 million yuan in sales revenue. By the first five months of last year, it had sold 3,060 units, generating 600 million yuan in revenue.
This success laid the foundation for further collaboration, including the heavy truck project. In March 2002, JAC signed an agreement to introduce six models of heavy trucks from Hyundai, which had previously only been produced in South Korea. JAC invested 300 million yuan to set up a dedicated production line, aiming for a capacity of 10,000 vehicles annually. Industry experts believe that this project will help JAC build a comprehensive commercial vehicle product lineup, potentially boosting profits and strengthening its position in the domestic market.
For Hyundai, the situation in China is increasingly complex. With limited growth in the high-end heavy truck segment in South Korea, the company is looking to expand its presence in the Chinese market. Its overseas expansion plan aims for 25% of its production to be based in China by 2010. However, previous attempts, such as the failed Guangzhou Peugeot project and the unresolved Beijing Automotive joint venture, have highlighted challenges.
This new partnership with JAC could be a strategic move for Hyundai, allowing it to tap into China’s growing commercial vehicle market. It also signals the end of an earlier joint venture with Huatai Automobile, as national industrial policies now make such a collaboration unlikely. As Hyundai continues to navigate the Chinese market, its focus on JAC may prove crucial in securing a stronger foothold in one of the world’s largest automotive markets.