Fiat group commercial vehicle unit Iveco has prvided more details of its recently announced joint venture agreement with China's SAIC Motor Corporation and the Chongqing Heavy Vehicle Group which will establish a heavy vehicle partnership in the country.

Following expected approval by the Chinese central authorities, Iveco and SAIC will establish a 50-50 joint venture, under the name of SAIC Iveco Commercial Vehicle Investment Company. Its first move will be the acquisition of a 67% share of Chongqing Hongyan Motor Co, which is a subsidiary of the Chongqing Heavy Vehicle Group.

The agreement will see the construction of a new production plant located in Chongqing, with a total investment of approximately EUR120m, of which Iveco will be responsible for EUR40m. This is intended to support a volume increase from the current 15,000 to 40,000 heavy commercial vehicles in the medium term.

Current plans allow for the assembly of the Iveco Stralis range of heavy trucks, together with product and manufacturing related improvements in the Chongqing range. This is aimed at consolidating and reinforcing the current product range, whilst developing new opportunities with vehicles which offer the best mix of local and European components and technologies.

"The agreement is part of a broad plan for Iveco's development in China," said CEO Paolo Monferino.

"Iveco considers China as a priority not only because of its market's size, growth rate and the cost of manufacturing, but because local engineering knowledge is outstanding and there is significant potential for global product planning. The partnership with SAIC is an important milestone in our strategy."

Fiat group and SAIC already have three joint ventures in China: Shanghai New Holland, claimed to be the leader in the 50hp tractor market; Huadong Teksid, said to be the biggest producer of engine blocks in China, and Shanghai Meridian, producing magnesium casting components.

Chongqing Heavy Vehicle Group (formerly the Sichuan Automobile Factory), owned by the Chongqing Municipality through its subsidiary Chongqing Hongyan Automotive, is one of the major producers of medium and heavy trucks in China (over 15,000 per year) and has a large distribution network throughout the country.