General Motors is talking with FAW Group about a light commercial vehicles joint venture to take advantage of government policies intended to boost demand for pick-up trucks and vans.

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FAW currently operates car building joint ventures with Volkswagen and Toyota Motor.


GM China spokesman Henry Wong told Reuters on Thursday the two parties had registered a name with the State Administration for Industry and Commerce, but declined to specify the nature of the partnership.


“Joint venture is far from complete, but the registration of the name is just one of the processes,” Wong said when asked whether the partnership would lead to a full-fledged joint venture. “We still have a lot of work to do before the joint venture becomes a reality.”


GM already makes light commercial vehicles in China in a three-way venture with SAIC Motor and Liuzhou Wuling Automobile and has a car manufacturing JV in Shanghai with SAIC.

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Reuters said GM, which holds 34% of SAIC-GM-Wuling, wants to raise its stake due to strong demand for cheap light trucks and vans in small cities and rural areas even though car sales growth dropped last year as China’s economy slowed.


The LCV venture’s sales rose 17.9% year on year to 647,296 units in 2008, accounting for nearly 60% of GM’s overall China sales, while the car JV sold 445,709 vehicles (many under the Buick brand, which is highly successful in China), down 7.03%.


“The commercial vehicle segment is getting more important for GM as consumers postpone buying big-ticket items like cars,” said Guotai Junan Securities senior analyst Zhang Xin told the news agency. Government subsidies could further drive up demand for pick-up trucks and minivans.”


China’s government operates a number of policies intended to boost sales by the domestic auto industry, including subsidies to owners who trade-in high-emission farm vehicles for more fuel-efficient and environment-friendly models.