GM Talking With Chinese Truck Manufacturer Zhongxing About Joint Venture
By Brendan Moore
Fresh off their failed venture with Chamco that was supposed to retail their vehicles in the United States, Chinese pickup truck maker Hebei Zhongxing Automobile Co is now talking with General Motors about a possible tie-up that may include an equity stake in the Chinese company.
Zhongxing had to delay plans for a $300 million plant in Mexico after it walked away from its planned distribution joint venture with Chamco Auto, a U.S.-based vehicle importer. Chamco has fallen into a legal abyss, with partners and executives of the failed company slugging it out in court, and the operations of the company turned over to a trustee of the New Jersey courts.
Zhongxing is not one of the major car companies in China, but it is a major producer in the pickups and sport-utility vehicle segments. It’s agreement with Chamco had called for Zhongxing to supply two of its largest pickup trucks and one of it’s SUV models (which would have still be considered small truck in the U.S.) for sale in the American market. The company forecasts sales of approximately 45,000 vehicles this year, including 15,100 overseas.
Zhongxing is also talking with FAW Group in China about a possible tie-up.
It is easy to see the benefit to FAW Group of having Zhongxing as a partner: the small trucks would perfectly complement FAW’s mid-size and large commercial trucks in the market. Less obvious is the benefit to GM, since the vehicles Zhongxing makes are the ones having a bit of a bad time of it in some markets. But, small trucks and SUVs are still going great guns in developing markets worldwide, as well as the home market of China, so maybe GM would buy a piece of them just to get those sales. Or, maybe they would like to have Zhongxing produce a small car for them, especially right across the border in Mexico, where the shipping costs would be very low. Or, perhaps some combination of both.
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