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Subaru, BAIC reach preliminary deal on Chinese JV

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Subaru and Beijing Auto Industry Corp (BAIC) have finally reached a preliminary agreement on establishing a joint venture in China, but not the rumored two-way partnership in which each side holds half of the shares.

Media said that China's third largest automobile sales dealer, Power Diversity Automobile Trade Group Co., Ltd. (hereinafter referred to as Power Diversity) will also take part in the investment program under which Subaru, BAIC and Power Diversity will build a facility in Tangshan city, North China's Hebei province, where Power Diversity is located in. Moreover, a Subaru SUV will first be made there. However, the information has not been confirmed yet.

Reportedly, BAIC and Power Diversity will each hold a 25% stake in the facility and Subaru will get the lion's share of 50% stake. At present, BAIC has already set up a special team for the program and two representatives are currently in talks with Subaru and Power Diversity, aiming to achieve a final agreement this year.

Apart from that, Chinese media said the joint venture plant and headquarters may also be built in Beijing, and 50,000 Subaru SUVs will be produced in the first phase, followed by the production of Subaru sedans in the second phase.

BAIC expects the negotiations to be completed by October and to put the project into operation by mid-2012.
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