Production Capacity of European (VW/PSA/BMW/Fiat Combined)
Passenger Cars in China Targeted at 2.32 Million a Year by 2010
960,000 produced in 2006 and 1.1 million planned for 2007

  In 2006, auto manufacturers in China produced 956,000 passenger cars through their partnerships with four auto manufacturers in Europe - VW/PSA/BMW/Fiat. They plan to manufacture 1,096,000 in 2007.

  The combined annual production capacity of the above auto manufacturers that are currently tied up with the 4 groups amounted to 1.24 million at the end of 2006. They plan an annual production capacity of 2.32 million with the target year set at 2010. Of the planned 2.32 million, China-based auto manufacturers that are tied up with the VW group account for 1.46 million (license production of models based on SEAT car is not included) while Dongfeng-Peugeot-Citroen Automobile, which tied up with PSA, plans 450,000 and BMW Brilliance Automotive plans 120,000. Nanjing Fiat Automobile plans to produce/sell 300,000 in 2010.

  The three mass-production auto manufacturers excluding BMW say that they will introduce new models in their production bases in China, which are currently boosting a production capacity, almost every year. In addition, VW will enhance its production system for powertrain and auto-parts, planning to improve the environmental performance of cars that they manufacture in China and to reduce production cost.

■Outline of business plans by VW/PSA/BMW/Fiat

VW	The auto manufacturer targets a 20% share of the passenger car market in China in 2010, including a 2.5 to 3% by Skoda brand models. It will promote the differentiation of the products between Shanghai VW and FAW-VW. The VW Group will apply its global quality standard in China. The auto manufacturer will improve the fuel efficiency and emission of cars that are manufactured in China by 20% from the 2007 levels by 2010.
	The auto manufacturer will boost the production of powertrain and parts (it will make an additional investment of approximately USD600 million in the powertrain business by 2010). It will increase the local content ratio of parts used in cars that are manufactured in China from 70% in 2006 to 80% in 2008. Combined with the effect of joint purchasing and reduction of material price, the auto manufacturer will cut production cost in China by 40% from the 2005 level by the end of 2008.
	The number of dealers will be increased from approximately 600 at the end of 2006 to slightly more than 1,000 in the middle of 2007 in Shanghai VW's sales network for VW brand while the number will be expanded from 80 in January 2007 to 110 by the end of 2007 in its network for Skoda brand. In FAW-VW's sales network for Audi brand, the number of dealers will be increased from 134 in July 2006 to 170 by 2010 while in its network for VW brand, the number will also be expanded from 353 in July 2006.
PSA	The auto manufacturer targets a 7 to 8% share of the passenger car market in China in 2010. The sales target of Dongfeng-Peugeot-Citroen Automobile is 265,000 units in 2007, 300,000 in 2008, and 450,000 to 500,000 in 2010.
	The auto manufacturer will build a second passenger car plant of Dongfeng-Peugeot-Citroen Automobile in Wuhan city, Hubei province and will also expand the plant for powertrain and chassis in Xiangfan city, Hubei province (it will make an additional investment of 7.25 billion RMB jointly with Dongfeng Motor Group), in order to prepare an annual production system for 450,000 passenger cars by 2009. The second passenger car plant will be made into an exclusive plant for midsize/high-end cars and will conduct complete line production of Dongfeng-Peugeot-Citroen Automobile's production models (eight new models will be introduced in 2007-2009).
BMW	The auto manufacturer will boost the annual production capacity of the first passenger car plant of BMW Brilliance Automotive to 41,000 in 2007 (which is further increased to 50,000). It will newly build a second passenger car plant with an annual production capacity of 70,000 in Shenyang city. BMW aims to sell 100,000 in 2008 (including import cars).
Fiat	The auto manufacturer, jointly with Nanjing Automobile Group, will make an additional investment of 500 million Euro in Nanjing Fiat in 2006-2010. It targets production/sale of 300,000 in 2010 and a 6% share of the passenger car market in China. Fiat will introduce a new model every year starting in 2007.

■VW plans an annual production capacity of 1.46 million in 2010 and production of 750,000 in 2007

  Production of passenger cars based on VW and Audi cars numbered 697,000 in 2006 (all cars are under VW/Audi brand). Production is planned to increase to 750,000 in 2007, when production of Skoda brand cars will be added.

  The annual production capacity of Shanghai VW, which manufactures the above products, was 450,000 at the end of 2006, which is planned to be increased to 700,000. In addition, FAW-VW, which had an annual production capacity of 480,000 at the end of 2006, plans to boost the capacity to 660,000. Furthermore, VW currently plans jointly with China FAW a Chengdu plant with an annual production capacity of 100,000. Through its partnership with SAIC and China FAW, VW built up an annual production capacity of 930,000 in China at the end of 2006, planning to boost the capacity to 1.46 million.

  VW will introduce slightly more than 10 new models in its production bases, where it boosts the annual production capacity, in China by 2009, and will also expand the production of powertrain and parts, enhance the environmental performance of cars that are manufactured in China, and reduce production cost.

■Shanghai VW's and FAW-VW's production of models based on VW/Audi/Skoda car

	Production model	Base model	Production volume (unit)			Annual production capacity for passenger cars
			2005	2006	2007 (Plan)	End 2006	Expansion plan
Shanghai VW (Shanghai plant)	Santana	Santana B2	94,332	80,026	75,000	450	700
	Santana 3000	Santana 3000	52,175	82,410	77,000
	Passat	Passat B5	58,078	6,903	100,000
	Passat Lingyu	Passat GP		108,782
	Polo 2box	Polo HB 2box	8,273	9,010	71,000
	Polo Jingqing	Polo GP 2box		22,601
	Polo 3box	Polo HB 3box	5,819	4,600
	Polo Jingqu	Polo GP 3box		20,239
	Gol 2/4 door	Gol 2/4 door	10,786	7,502
	Touran	Touran	5,837	8,557	12,000
	Skoda Mingrui	Skoda Octavia			36,500
	Total		235,300	350,630	371,500	450	700
FAW-VW (Changchun plant)	Jetta	Jetta	143,606	175,742	300,000	480	660
	Sagitar	Sagitar		37,134
	Bora	Bora	38,228	38,817
	Bora 1.9TDI	Bora 1.9TDI	1,043	10
	Bora HS	Bora 2box
	Golf	Golf	7,232	14,278
	Caddy	Caddy	5,182	3,166
	Magotan	Magotan
	Audi A6	Audi A6	17,377	6,105	80,000
	Audi A6 2.5TDI	Audi A6 2.5TDI	309	0
	Audi A6L	Audi A6L	25,355	57,517
	Audi A4	Audi A4	7,852	14,018
	Total		246,184	346,787	380,000	480	660
Chengdu FAW Automobile (Chengdu plant)	Jetta	Jetta	In the planning stage				100
	Total						100
Grand total			481,484	697,417	751,500	930	1,460

■(Not included in the above figure) Production of models based on SEAT car under licensing

Wuxi Soyat Branch of Nanjing Automobile Group Co.	Soyat 2box	Ibiza	2,911	544	9,000	100	150
	Unique	Ibiza	525	468	4,000
	Total		3,436	1,012	13,000	100	150

(Note)

Models in blue color show newly-introduced ones. The unit for the annual production capacity is 1,000. Shanghai VW terminated production of Gol in December 2006. Chengdu FAW Automobile's future plan for its annual production capacity is 200,000. Wuxi Soyat Branch in the Nanjing Automobile Group targets production of 60,000 in 2010.

■VW launches 10 to 12 new models in 2007-2009

VW is reported to introduce 10 to 12 new models in Shanghai VW and FAW-VW in 2007-2009. As part of this move, the auto manufacturer plans to introduce SEAT brand cars in Shanghai VW as well. In addition, it is reported that it is currently developing a new model with a modern design and a spacious interior for the market in China, planning to release the model at 12,000 Euro in around 2009. VW is also reported to be developing a basic model for China/Russia/India at a selling price of 5,000-6,000 Euros.

■VW builds up a powertrain production system that uses advanced environmental technologies by 2010

In March 2007, VW announced that it will launch a powertrain strategy in which it aims to improve the fuel efficiency of cars to be manufactured in China by 20% by 2010. The total investment is worth approximately USD600 million. VW says that it will begin construction of a new powertrain plant in 2007 in addition to new engine plants in Dalian and Shanghai, both of which have just started operations.

Main objectives are: (1) it will also produce an environment-responsive gasoline engine with TSI (Turbo Stratified Injection), a high-pressure common rail diesel-powered engine, and a new-generation transmission that uses DSG twin clutch at its powertrain plant in China (2) it will increase the ratio of diesel-powered vehicles to be manufactured in China to 5% in 2010 and 20-30% in 2020 and will also promote production of hybrid vehicles, and (3) it will promote an eco-friendly production process by using lighter weight materials such as aluminum-alloy and magnesium alloy for auto-parts.

■Shanghai VW produces Skoda brand cars starting in 2007

Shanghai VW, which is equally owned by VW and Shanghai Automotive Co., Ltd., lined off Octavia (Mingrui) at its third passenger car plant in January 2007, starting production of Skoda brand cars (subscription sale began in February 2007). The 2007 production/sale is planned to be 36,500. Octavia shares the same PQ35 platform with Sagitar/Golf and its 1.8T FSI engine is manufactured at VW's Dalian engine plant (2.0L spec is also available). Shanghai VW plans to add production of Skoda Fabia and Skoda Superb in the future.

■Shanghai VW launches slightly more than 10 models by 2011 while it starts small-lot production of hybrid cars in 2008

Shanghai VW says that it will introduce slightly more than 10 new models in 2007-2011 (reported to include three Skoda brand models). Among the new models, eight models including two A0-class models, one model each in A-class/B-class/SUV are expected to be launched in 2008-2010.

In 2007, Shanghai VW is expected to introduce one VW brand car (Cross Polo is a strong candidate). In 2008, the auto manufacturer is expected to introduce a model based on Neeza concept and is also expected to initiate small-lot production of a hybrid spec Touran (initial production volume is about 500 units a year. Mass-production is planned to begin in 2010).

In 2006, Shanghai VW initiated production of new Polo 2box (Jingqing) and 3box (Jingqu) in June (1.4/1.6L engine spec. It was priced at 93,800-135,800 RMB at the time of subscription sale). Production/sale of Gol was terminated in December of the same year.

■An engine plant in Shanghai started operations in March 2006 with an annual production capacity of 180,000, producing 1.4/1.6L engine

In March 2006, the first stage construction of Shanghai Volkswagen Powertrain Co., Ltd., which is owned 60% by VW and 40% by Shanghai Automotive Co., Ltd., was completed (construction began in October 2003). Shanghai Volkswagen Powertrain started producing EA111 series 1.4/1.6L gasoline engine that meets EuroIV emission standards.

The annual production capacity of the new engine plant in Shanghai is 180,000 for the time being, which is planned to be boosted to 300,000. The total investment is worth USD300 million. The product is supplied to Shanghai VW and FAW-VW as well as exported to VW overseas plants. Production of 1.4/1.6L EA111 engine, which features TSI technology, is planned to be added.

■FAW-VW increase the annual production of Audi cars to 100,000 by 2009

Audi plans to expand production at FAW-VW in China, which is owned 40% by the VW group and 60% by China FAW (including 10% by Audi). In July 2006, Audi announced that it would target production of 80,000 in 2007 and 100,000 in 2009. Audi plans to make A4 into one of its core models in addition to A6 and is scheduled to introduce new A4 in 2008.

■Under VW brand, FAW-VW introduced Sagitar in 2006 and will introduce Bora HS and Magotan in 2007

As a car under VW brand, FAW-VW began producing 5-door spec Bora 2box (New Bora HS) in January 2007 (Price for subscription sale is 112,500-132,500 RMB for 1.6L spec and 129,800-142,800 RMB for 1.8L spec). The company also plans to introduce Magotan (Passat B6) by June 2007 (initially, 1.8T FSI engine spec. 2.0L spec is also planned to be added).

Incidentally, in 2006, the company began production of Sagitar, which is based on the 5th-generation Jetta, in February (FAW-VW had been focusing on Jetta, which is based on the 2nd-generation Jetta, and Bora, which is based on the 4th-generation Jetta as its main models).

■The Dalian engine plant started operations in March 2007 with an annual production capacity of 150,000, producing 1.8L engine

In March 2007, Volkswagen-FAW Engine Co., Ltd., which is owned 60% by VW and 40% by China FAW, initiated production of TSI gasoline engine with Audi EA888 series 1.8L turbocharger, which meets Euro IV emission standards (the engine is supplied to Shanghai VW Skoda Octavia and FAW-VW Magotan. Construction of the plant began in May 2005).

The immediate annual production capacity of the new engine plant in Dalian is 150,000, which are planned to be expanded to 300,000 (production of 2.0L engine is also planned). The total investment is worth USD1.5 billion. In addition, the new plant is attached with a machining line for cylinder block/cylinder head/crank shaft/camshaft. The product is supplied to Shanghai VW and FAW-VW as well as exported to VW's overseas plants.

■PSA will prepare an annual production system for 450,000 by 2009. Its 2007 production is planned to be 265,000

  Production of passenger cars by Dongfeng-Peugeot-Citroen Automobile, which produces passenger cars based on PSA car, numbered 202,000 in 2006 and is planned to be 265,000 in 2007 (all products are under Peugeot/Citroen brand).

  Dongfeng-Peugeot-Citroen Automobile had an annul production capacity of 220,000 at the end of 2006. The auto manufacturer plans to build up a production system for 450,000 with the target year set at 2009 by constructing its second plant for midsize cars/high-end cars with an annual production capacity of 150,000 (the annual production capacity of the first plant will also be expanded to 300,000). Including the introduction into the second plant, PSA will newly introduce eight models or more by 2009, making production at Dongfeng-Peugeot-Citroen Automobile into full lineup production.

  PSA has been pressing ahead with the preparation of a business system of PSA/Dongfeng-Peugeot-Citroen Automobile; it established a supervising company for the import and sale business and an auto financing company in 2006 while Dongfeng-Peugeot-Citroen Automobile also announced a plan for a new R&D center at the end of 2006.

■Dongfeng-Peugeot-Citroen Automobile's production of models based on PSA car

	Production model	Base model	Production volume (unit)			Annual production capacity for passenger cars
			2005	2006	2007 (Plan)	End 2006	Expansion plan
Dongfeng-Peugeot- Citroen Automobile (Wuhan first plant)	Fukang 2box	Fukang 2box	41,085	37,698	36,000	220	300
	Fukang 3box	Fukang 3box	11,037	11,768
	XsaraPicasso	XsaraPicasso	2,032	1	0
	Elysee	Elysee	45,531	40,587	0
	New Xsara Picasso	New Xsara Picasso			10,000
	New Elysee	New Elysee			29,000
	Xsara	Xsara	2,181	0	n.a.
	C-Triomphe	C-Triomphe		24,241	60,000
	Citroen C2	Citroen C2		5,318	30,000
	Peugeot 307	Peugeot 307	39,566	50,680	100,000
	Peugeot 206	Peugeot 206	229	31,565
	(Plan for a second plant) Citroen/Peugeot brand high-end model based on PF3 platform						150
Total			141,661	201,858	265,000	220	450

(Note)

Models in blue color show newly-introduced models. The unit for an annual production capacity is 1,000. Xsara, which was not produced in 2006, is a made-to-order model. Incidentally, the 2007 sales target for Peugeot brand import cars is 1,200.

■Dongfeng-Peugeot-Citroen Automobile will build its second passenger car plant with an annual production capacity of 150,000, building up a annual production system for 450,000 in 2009

Dongfeng-Peugeot-Citroen Automobile, in which PSA and Dongfeng Motor Group each holds a 50% stake, will invest 7.25 billion RMB in the construction of its second passenger car plant with an annual production capacity of 150,000 and the expansion of the powertrain/axle plant, preparing an annual production system for 450,000 in 2009.

The construction of the second passenger car plant began at the east side of the existing first passenger car plant in Wuhan city, Hubei province in October 2006 (land area: 667,000 square meters). The new plant is scheduled to be completed in 2009 as an exclusive plant for midsize cars/high-end cars based on PF3 platform. The annual production capacity of the new plant will be 150,000; the combined annual production capacity of Dongfeng-Peugeot-Citroen Automobile will expand to 450,000. With this move, a powertrain/axle plant and a machining plant in Xiangfan city, Hubei province will also build up a production system for 450,000 by the end of 2008 (the expansion work began in January 2007).

■By enhancing the R&D function, Dongfeng-Peugeot-Citroen Automobile builds up a system for independent development by 2015

In December 2006, Dongfeng-Peugeot-Citroen Automobile announced that it would establish a new R&D center based on the existing R&D center as a founding body. Dongfeng-Peugeot-Citroen Automobile has so far invested slightly more than 200 million RMB in its R&D center. The company has prepared a laboratory for finished car/engine/parts as well as a laboratory for material and emissions, employing about 800 engineers.

The new R&D center is planned to consist of four divisions - finished car/platform/machining/technical support. The objectives include: (1) it will achieve a 80-90% capability for independent development in each field by 2007. (2) it will develop a model based on PSA car jointly with PSA in 2010 to make development of a Chinese spec model into independent development. (3) it will prepare an independent development system for a proprietary model in 2015.

■Dongfeng-Peugeot-Citroen Automobile introduced eight new models in 2007-2009

Dongfeng-Peugeot-Citroen Automobile plans to introduce eight or more new models in 2007-2009. The company plans to introduce three models in 2007, three models in 2008, and two models in 2009 (it will introduce an own-brand car, which it has been developing since 2004, around the end of 2008).

In March 2007, subscription sale of a new model of Xsara Picasso - New Xsara Picasso (5-door spec based on C4) - was started (1.6/2.0L 2 specs: the selling price of 1.6/2.0L is 125,800-149,800 RMB). The company plans to introduce new Citroen Elysee and a midsize car under Peugeot brand by the end of 2007.

Incidentally, the company released Peugeot 206 hatchback 1.6L spec in February 2006 at 86,800-108,800 RMB and 1.4L spec in July of the same year at 77,800 RMB. Under Citroen brand, the company started marketing of C-Triomphe in May 2006 at 179,800-208,800 RMB and C2 in November of the same year at 77,800-106,800 RMB (1.4/1.6L 2 specs).

■PSA established a supervising company for import/sale and an auto financing company

In April 2006, PSA established Peugeot-Citroen (China) Auto Trading Co., Ltd. in Beijing, which supervises the import/sale business in China. The new company is owned 100% by PSA. It is capitalized at 50 million RMB. The new company supervises the operations for import of passenger cars and export of parts in China.

In May 2006, three companies - PSA/Dongfeng-Peugeot-Citroen Automobile/Hong Kong-based Bank of China Insurance (a wholly-owned subsidiary of Bank of China) - jointly established an auto financing company in Beijing - Dongfeng Peugeot-Citroen Auto Financial Co., Ltd., starting its operations in July 2006. The new company started its business with auto financing and plans to start used car financing as well.

■BMW will prepare an annual production system for 120,000 cars by 2010, planning 2007 production of 30,000

  BMW Brilliance Automotive's production of passenger cars based on BMW car numbered 26,000 in 2006, which are planned to be 30,000 in 2007 (all products are under BMW brand).

  BMW Brilliance Automotive had an annual production capacity of 30,000 at the end of 2006 and will increase the capacity to 41,000 in 2007 (further to 50,000 later). The auto manufacturer plans to newly build a second passenger car plant with an annual production capacity of 70,000, preparing a production system of 120,000 a year by 2010.

■BMW Brilliance Automotive's production of models based on BMW car

	Production model	Base model	Production volume (unit)			Annual production capacity for passenger cars
			2005	2006	2007 (Plan)	End 2006	Expansion plan
BMW Brilliance Automotive (The first plant of Dadong District)	BMW 3 Series	3 Serise	6,353	15,348	30,000	30	41
	BMW 5 Series	5 Serise	3,383	10,460
	Plan for the second plant of Tiexi District						70
Total			9,736	25,808	30,000	30	111

(Note)

The unit for an annual production capacity is 1,000. The annual production capacity of the first plant is 410,000 in 2007, which will be expanded to 50,000.

■BMW Brilliance Automotive plans to build up an annual production system for 120,0000 in 2010
■The annual production capacity of the Shenyang first plant will be expanded to 41,000

BMW Brilliance Automotive, which is owned equally by BMW and Brilliance Automobile Group, will improve the production line at its first passenger car plant (Shenyang city, Liaoning province) in order to boost the annual production capacity from the current 30,000 (3 shifts) to 41,000 by the end of 2007, and then further to 50,000.

■BMW plans the construction of its second plant in Shenyang with an annual production capacity of 70,000

With the investment of 180 million Euros, BMW plans to build a second passenger car plant in Shenyang City jointly with Brilliance Automobile Group. If it wins approval from the Chinese government, BMW plans to begin the construction in 2007 and to start production in 2010. The annual production capacity is approximately 70,000. It is reported that Tiexi District in Shenyang City is a likely candidate site.   Incidentally, it is reported that Brilliance Automobile Group is also studying the possibility of constructing a new plant for passenger cars under its own brand in the vicinity of the new plant.

■BMW Brilliance Automotive released new 5 series at the end of 2006

In November 2006, BMW Brilliance Automotive started subscription sale of new 5 series (the standard selling price is 699,000 RMB for 530Li, 612,000 RMB for 525Li, and 518,000 RMB for 523Li). In March 2007, the auto manufacturer released a simplified spec of the new 5 series (642,600 RMB for 530Li, 558,600 RMB for 525Li, and 477,600 RMB for 523Li).

■Fiat targets production/sale of 300,000 in 2010, planning to produce 50,000 in 2007

  The 2006 production volume by Nanjing Fiat, which produces passenger cars based on Fiat car, was 31,000. The auto manufacturer plans to produce 50,000 in 2007.

  Nanjing Fiat had an annual production capacity of 60,000 at the end of 2006. The plant is reported to be a plant, which is capable of boosting its annual production to 100,000 easily. Fiat has yet to announce its expansion plan for its production system in China, but it targets production/sale of 300,000 in 2010. It is likely that, as part of its annual production system for 300,000, production at Chery Automobile, which is currently being negotiated, will be included.

  Incidentally, Fiat has been forming a partnership with Nanjing Automobile Group in the field of commercial vehicles as well (it holds half the stake in Nanjing Iveco Automobile) and has expanded the partnership into the filed of light-duty trucks. Fiat is also deepening its relationship with Shanghai Automotive Co., Ltd. and Chongqing Heavy Vehicle Group.

■Nanjing Fiat's production of models based on Fiat car

	Production model	Base model	Production volume (unit)			Annual production capacity for passenger cars
			2005	2006	2007 (Plan)	End 2006	Expansion plan
Nanjing Fiat (Nanjing plant)	Palio	Palio	18,219	15,238	50,000	60	100
	Palio Weekend	Palio Weekend	4,430	4,476
	Siena	Siena	10,138	8,684
	Perla	Perla 3box		2,534
Total			32,787	30,932	50,000	60	300

(Note)

The unit of annual production capacity is 1,000. The annual production system of 300,000 is the target for 2010. Chery Automobile is also negotiating OEM production of Fiat cars and a capital tie-up with Fiat.

■Nanjing Fiat targets production/sale of 300,000 for 2010

In November 2006, Fiat announced that it would make an additional investment of 500 million Euro in Nanjing Fiat in 2006-2010, which it equally owns with Nanjing Automobile Group. Fiat targets a 6% share of the passenger car market in China and production/sale of 300,000 in 2010.

■Fiat introduces a new model every year starting in 2007

Fiat will introduce a new model in Nanjing Fiat each year between 2007 and 2010. It is reported that 1.6L Doblo new concept MPV and D200 midsize passenger car are likely to be introduced in 2007 and 2008, respectively, but new Linea 3box, 5-door spec Grande Punto compact car, and Bravo compact car with a wheelbase of 2,600mm are also likely candidates.

Incidentally, Nanjing Fiat launched Perla 3box, a sedan based on Siena in 2006 (it uses 1.7L engine that it jointly developed with Fiat. The standard selling price was 79,800-89,800 RMB in November 2006).

■Fiat procures engines that Chery Automobile manufactures, also negotiating OEM production of passenger cars

In November 2006, Fiat and Chery Automobile signed a memorandum of understanding (MOU) on the supply of engines that Chery Automobile manufactures to Fiat models. It is reported that Fiat plans to procure 100,000 1.6/1.8L ACTECO engines a year from Chery Automobile to use in Fiat passenger cars that are manufactured in China as well as in Turkey (Linea and other models).

Fiat and Chery Automobile are currently negotiating on OEM production or joint production of Fiat group cars in China (candidate models for the OEM production are reported to be Lancia and Alfa Romeo).

(Note)

There is a media report in China that Chery Automobile plans to take a stake in Nanjing Fiat.

■Nanjing Iveco integrates Nanjing Automobile Group's light-duty truck business, also building a new plant for heavy-duty trucks in Chongqing

Nanjing Iveco, which is equally owned by Iveco in the Fiat group and Nanjing Automobile Group, acquired Yuejin Automobile Co., Ltd. - a light-duty truck manufacturer in the Nanjing Automobile group - in February 2007. With the high-end spec light-duty truck business as its core, Nanjing Iveco plans to boost its annual production capacity to 100,000 by 2009 (it is reported Nanjing Iveco plans to export 30,000-40,000 Yuejin brand light-duty trucks a year to Iveco's global sales network). Incidentally, the sales target of Yuejin brand cars for 2007 is approximately 60,000, or up 50% from the year earlier (including about 10,000 for export).

Nanjing Iveco plans to launch a new model at an early date by improving a light-duty truck under Yuejin brand using Iveco's technology. Prior to this move, the auto manufacturer released Yuejin brand light-duty trucks - Shuaihu/Zhuanka, which it jointly updated with Iveco, at the end of 2006 (Iveco SOFIM engine is used).

■Iveco will establish a heavy-duty truck plant in Chongqing jointly with Shanghai Automotive/Chongqing Heavy Vehicle Group

In November 2006, Iveco in the Fiat group signed a contract with Shanghai Automotive Co., Ltd. and Chongqing Heavy Vehicle Group on the establishment of SAIC Iveco Hongyan Commercial Vehicle Co., Ltd., which produces heavy-duty trucks, and SAIC Fiat Automotive Engine Co., Ltd., which manufacturers powertrain for heavy-duty trucks, in Chongqing Northern New Area Economic & Technical Development Park (Fiat Powertrain Technologies also participates in the establishment). Iveco will establish a new company by 2008, planning to build up an annual production system for 40,000 heavy-duty trucks and 30,000 large engines. The total investment is worth 120 million Euros. The auto manufacturer has already secured a plant site of 667,000 square meters.

SAIC Iveco Hongyan Commercial Vehicle Co., Ltd. will be established based on a heavy truck manufacturer - Chongqing Hongyan Automobile (Chongqing city) - as a founding body. SAIC Iveco Hongyan Commercial Vehicle is owned 67% by SAIC Iveco Commercial Vehicle Investment Co., Ltd. - an investment company established equally by Iveco and Shanghai Automotive Co., Ltd. in September 2006- and 33% by Chongqing Heavy Vehicle Group. The new company plans to produce heavy-duty commercial vehicles and engines, which employ Iveco's technology.

Incidentally, prior to the establishment of the new company, Nanjing Iveco/Fiat Powertrain Technologies/Shanghai Automotive reached a basic agreement on the long-term cooperation in the production of medium size/large diesel-powered engines in July 2006.

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