The Chongqing Yinxiang Group and Beijing Automotive Industry Holding (BAIC) inked a strategic cooperation agreement on Wednesday, under which the two sides would invest CNY1.5bn to construct a new minivan base in southwest China's Chongqing municipality.

The minivan base, covering an area of over 66.7 hectares, is to start construction by the end of this year and start production in 2012, Xinhua news agency reported.

Upon completion, the minivan base, dedicated to the production of minivans and engines, is expected to produce 300,000 units annually.

Chongqing already has five minivan companies, including ChangAn Auto and Lifan Auto.

The combined minivan production capacity in Chongqing is expected to reach about 3m units by the end of this year.

Chongqing Yinxiang Group is a major motorcycle producer in China, able to produce 1.2m motorcycles, 2.5m motorcycle engines and 2.5m petrol engines annually.