Volkswagen, JAC Motors teaming up

Employees work at the production line of Anhui Jianghuai Automobile Co Ltd in Hefei, capital of Anhui province.[Photo by Liu Yifan/China Daily]

The two companies will build a 50:50 joint venture in Hefei, Anhui province, where JAC Motors is headquartered, according to a memorandum of understanding signed on Monday.

Volkswagen said the partnership will involve a full range of cooperation covering research, development and sales of multifunctional vehicles－both powered by internal combustion engines and new energy ones.

But it did not reveal specifics like the amount of investment involved, the date the partnership will be finalized, and the brand that the vehicles developed by the joint venture would sport.

The agreement comes at a time when commercial cars are growing fast in China. A total of 3.07 million vehicles were sold from January to September this year, up 17.9 percent year-on-year, 13.4 percentage points higher than the average of the auto-motive market, according to the China Association of Automobile Manufacturers.

Jochem Heizmann, a board member at Volkswagen AG and head of Volkswagen Group China, said, "Volkswagen welcomes this opportunity to pursue further cooperation with JAC. Both groups have complementary strengths in the multifunctional vehicle field."

Volkswagen builds and sells the Transporter, Caddy, Crafter and Amarok ranges, with around 480,000 vehicles sold in 2016 worldwide. JAC Motors produces and sells trucks, buses, multifunctional commercial vehicles, sports utility vehicles, sedans and key components such as chassis, transmissions, engines and axle units.

It sold 427,091 vehicles in the first 10 months of this year, some 57 percent of which were commercial vehicles.

JAC Motors Chairman An Jin said: "We see great potential for mutual benefit in an area where both companies have strong advantages. Together, we can greatly enhance the multifunctional vehicle market, bringing consumers excellent products and more choices."

The partnership when finalized will become the second one between Volkswagen and JAC Motors. The two firms inked a deal in June to develop and produce electric passenger cars, with its first vehicle slated to hit the market in 2018.

Volkswagen also has joint ventures with China's FAW Group Corporation and SAIC Motor Corporation.

As the best-selling carmaker in China, Volkswagen and its joint ventures delivered some 2.9 million cars in the Chinese mainland and Hong Kong in the first three quarters of this year, up 1.4 percent year-on-year.