Yesterday's official launch came nine months after Dongfeng and Nissan reached an agreement to set up the JV, known as the Dongfeng Motor Co Ltd.

Dongfeng Motor Co Ltd is the biggest Sino-foreign automobile JV so far in terms of investment and business scope.

The 50-50 operation has a registered capital of 16.7 billion yuan (US$2 billion). Nissan said it has put up US$1 billion in cash.

The parent Dongfeng, one of China's top three automakers, has devoted almost all of its businesses except its car and engine JV projects with other foreign partners - including French PSA Peugeot Citroen, Japan's Honda and Cummins of the United States - to the new venture.

The JV aims to produce 550,000 automobiles annually by 2006, including 330,000 Dongfeng-brand commercial vehicles and 220,000 Nissan-brand passenger cars.

The JV will also produce engines and spare parts.

Dongfeng Motor Co Ltd has a workforce of 74,000 and will start operation on July 1.

The JV's board chairman will be Miao Wei, general manager of the parent Dongfeng, and Katsumi Nakamura, the head of Nissan's operations in China, will be president.

The venture's first passenger car, the Nissan Sunny, will roll off the assembly line later this month, Carlos Ghosn, president of Nissan, said yesterday at the launching ceremony in Wuhan, where the new venture is headquartered.

The 2-litre Sunny will be produced at the JV's plant in Guangzhou, in South China's Guangdong Province.

"Nissan will introduce another five new passenger models into the joint venture by 2006," Ghosn said.

Sources from Dongfeng said the Guangzhou plant will produce the Teana - Nissan's newly launched luxury sedan - next year.

Nissan, 36.8 per cent owned by French automaker Renault, will bring its Cefiro sedan into the JV's plant in Xiangfan of Hubei Province later this year.

It will also produce buses and light trucks in Dongfeng's existing manufacturing base in Xiangfan.

Medium and heavy-duty trucks will be made in Shiyan, Dongfeng's headquarters in the province.

Dongfeng would also study the possibilities of Renault's participation in the project, Miao said.

Nissan is the latest foreign investor in China's auto industry.

Before that, world big names such as Volkswagen, General Motors and Toyota have set up joint ventures with China's domestic auto giants, like the First Automotive Works Corp based in Northeast China's Jilin Province and the Shanghai Automotive Industry Corp.

"Dongfeng Motor will be key to opening Nissan's new frontier in China," Ghosn said.

China's auto market is forecast to exceed 4 million units this year.

Last year, sales soared more than 50 per cent to top 1.1 million vehicles. In April, more than 167,000 cars were sold, 63 per cent more than a year earlier, according to data from industry research firm Automotive Resources Asia.

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