Partnership will involve a range of cooperation, including research, development and sales

German automaker Volkswagen AG is joining hands with Anhui Jianghuai Automobile Co Ltd (JAC Motors) to develop and sell commercial vehicles in China in an effort to grab a slice of the segment that is growing rapidly in the world's largest automobile market.

The two companies will build a 50-50 joint venture in Hefei, Anhui province, where JAC Motors is based, according to a memorandum of understanding signed on Nov 27.

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

But it has not revealed specifics like the amount of investment involved, the date the partnership will be finalized or the brand names that the vehicles developed by the joint venture will sport.

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

Jochem Heizmann, a board member at Volkswagen AG and head of Volkswagen Group China, says: "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 worldwide in 2016. JAC Motors produces and sells trucks, buses, multifunctional commercial vehicles, sport 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, 57 percent of which were commercial vehicles.

JAC Motors Chairman An Jin says: "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 be the second between Volkswagen and JAC Motors. The two companies inked a deal in June to develop and produce electric passenger cars, with the first vehicle slated to hit the market in 2018.

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

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

[email protected]

(China Daily Africa Weekly 12/01/2017 page28)