China's FAW Group Corporation and Dongfeng Motor have signed an agreement to set up a jointly-owned R&D centre focused on the development of advanced technologies such as fuel cells, smart connectivity and lightweight materials.
The centre will help the two companies save money by sharing development costs for advanced technologies. Key suppliers will be invited to get involved, with a view to increasing economies of scale through joint procurement.
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The move has fuelled speculation that the two groups may eventually join forces in their wholly-owned automotive operations.
FAW Group, based in the northern city of Changchun, is one of the leading Chinese automotive groups with joint ventures with Volkswagen Group and Toyota. Last year it reported a 9.2% sales rise to 3.1 million units, including its own-brand sales and 1.9 million units at its FAW-Volkswagen joint venture.
Dongfeng Motor, based in the city of Wuhan, has joint ventures with France's PSA Peugeot-Citroen, South Korea's Kia Motors and Japan's Honda Motor and Nissan Motor, with combined sales of 3.15 million units last year.
