Shanghai, January 17, (Gasgoo.com)-Mitsubishi Motors' longstanding plan to set up a new joint venture automaker in China now runs into snags, as the program may be blocked by China's auto industry regulations, the Shanghai-based Oriental Morning Post reported today.
"We are still studying the joint venture plan," said Hiromi Endo, general manager of Mitsubishi Motors Beijing Office, who didn't explain how to bypass the regulation problems.
Under the Revised Regulations on Automotive Industry stipulated by central government in late 2006, new players must have at least a total investment of 4 billion yuan ($550.7 million) in order to enter the auto-making industry. Besides that, passenger vehicle makers must have engine-making facilities with total investment of no less than 1.5 billion yuan ($206.5 million).
But the two parties, Mitsubishi and Hunan Changfeng Motors currently fail to find an engine plant as required by the policy.
"We'll try our best to meet the government requirements so as to start the joint venture as early as possible," an unnamed Changfeng official.
Earlier reports revealed that the JV would be a 50:50 alliance. And it would build sedans and sports-utility vehicles (SUVs) if approved.
Mitsubishi already owns a 16.07% stake in Hunan Changfeng, but this deal would consolidate their partnership. Changfeng now builds Pajero and Pajero Pinin that sold in Chinese market.