By Gong Zhengzheng (China Daily)
Updated: 2008-01-09 09:29

Chery Automobile Co, a fast-growing Chinese maker of cheap cars, has been approved to form a venture with the US arm of Israel Corp to produce sedans and SUVs for the local and overseas markets.

The venture with Quantum LLC will have a production capacity of 150,000 Chery vehicles a year, the National Development and Reform Commission said yesterday, without elaborating.

Under the deal clinched last June, Chery will hold a 55 percent stake in the 5.83-billion-yuan ($801.93 billion) venture, with Quantum taking the remainder. Israel Corp is an investment firm owned by the billionaire Ofer family.

Jin Yibo, a Chery spokesman, told China Daily yesterday that the venture would start building a plant this March in Wuhu, the Chinese firm's home base.

The plant will begin making medium and high-end sedans and SUVs in 18 months, Jin said.

Chery said last week that its 2007 sales jumped by a quarter to 381,000 vehicles from the previous year. But the QQ micro car remains its best-selling model.

Chery has also set up tie-ups with other foreign partners as it tries to achieve its ambitious sales target.

It agreed to establish a 50-50 venture with Fiat last August to produce Chery, Fiat and Alfa Romeo cars with an annual production capacity of 175,000 units for both domestic and foreign buyers.

Last July, Chery struck a deal with Chrysler to make small cars under badges from the Detroit-based carmaker for the US and European markets.

Chery said last year that it aimed to boost its global sales to 1 million vehicles a year by 2010.

Top Chinese auto group SAIC Motor Co Ltd yesterday said its sales rose by 25.8 percent to 1.69 million vehicles last year.