Ford, the US automotive group, has opened a door to the potentially vast Chinese market by agreeing to buy a 20 per cent stake in Jiangling Motors Corp for about $40m (pounds 25m). The two have also agreed to develop a new line of trucks, vans and mini-buses for sale in China and for export.
Under the agreement, Ford will appoint three senior executives to Jiangling's board and will participate in the company's management. Wayne Booker, vice president of Ford's international automotive operations, said: "The co-operation with JMC forms an integral part of Ford's global strategic planning. It marks a significant step in Ford's development of the PRC [China] market."
Ford will take 80 per cent of Jiangling's class B shares, which are reserved for foreign investors. The shares are expected to be issued later this year.
The landmark deal marks Ford's first car manufacturing operation in China. The carmaker already has four other joint ventures making car parts and components but has lagged rivals, including General Motors and Chrysler, in expanding into vehicle production in China.
Most of Ford's $40m investment will go towards boosting Jiangling's annual capacity to 110,000 vehicles from 50,000. The joint venture will make trucks and vans but will focus on mini-buses, the most profitable and suitable for the China market. The vehicles will contain about 60 per cent locally produced components.
Ford and Chrysler lost out to Germany's Mercedes-Benz in bidding for a $1bn project to build 60,000 mini-vans a year in China.
Ford will continue to bid for other car projects in China, including a "family car" project and an intermediate car project with Shanghai Automotive Industry Corporation.