TAIPEI/TOKYO -- Nissan Motor Co., Japan's third-largest automaker, moved to strengthen its push into the fast-growing China market on Tuesday by deepening its partnership with Taiwan's Yulon Motor Co.
Nissan, which owns 25 percent of Yulon Motor, said the companies had agreed a T$3 billion (US$86 million) joint venture that would handle everything from engineering to sales and marketing for Nissan in Greater China.
Nissan will hold 40 percent of the venture, tentatively named Yulon New, while Yulon Motor will own 60 percent.
The new company will include Yulon's successful China joint venture with Dongfeng Motor Co, Aeolus Automobile Corp.
Aeolus plans to increase annual output to 150,000 cars in 2004 from 35,000 this year. Nissan announced a separate 50/50 joint venture with Dongfeng last year aiming to roll out 550,000 cars by 2006, but this will not be included in Yulon New.
"Nissan wants to use Yulon's experience on the mainland, especially because Yulon's experience with Aeolus is already bearing fruit," said Raymond Yang, analyst at Taiwan's KGI Securities.
Automakers around the world are pouring into China, the world's fastest-growing car market. Sales there topped an annual one million units for the first time in 2002.
Nissan and Yulon Motor already have a deal under which Yulon makes and sells Nissan-branded cars in Taiwan, and that arrangement will continue. Nissan's 25 percent stake in Yulon Motor, however, will be transferred to Yulon New.
"The move to spin off the new company will allow Nissan and Yulon to jointly benefit from Yulon's expertise in Asia and Nissan's global operations, particularly as we expand with Dongfeng Motors," Nissan Chief Executive Carlos Ghosn told a news briefing in Taipei through a videoconference link.
Yulon Motor Chief Executive Kenneth Yen, said he aimed to eventually list Yulon New on the Taiwan Stock Exchange. Though Yen gave no timetable, the firm would opt for the exchange's recently-launched simplified listing procedure, which could put it on the board within a year.
Nissan, which is 44.4 percent owned by France's Renault, said the creation of Yulon New would not involve any cash investments.