Japanese carmaker Honda Motor Co's joint venture with Guangzhou Automobile Corp yesterday announced that it will create an all-new brand, the first model of which will be introduced in 2010, a bold move as all major Sino-foreign passenger car partnerships are assembling only overseas marques.

The 50-50 venture, called Guangzhou Honda Automobile Co, said it plans to develop a series of new models that won't bear the Honda imprint through a newly formed research and development center.

But the company, which is making Honda's mid-sized Accord, compact City, subcompact Fit and Odyssey wagon in the southern city of Guangzhou, didn't reveal the name of the new brand or what kinds of new models it will offer.

The venture said it will initially spend 2 billion yuan on a research and development center that is to be operational next year.

Guangzhou Honda's new-brand plan follows regulators' calls for Sino-foreign car ventures to accelerate development capacity and even create their own badges instead of being low-cost assemblers of overseas nameplates.

Chen Jianguo, an official from the National Development and Reform Commission, China's top industry watchdog, said yesterday that "Guangzhou Honda is leading joint ventures in building new brands which will make the others attach great importance in this field".

Shanghai Volkswagen Automobile Co, the Sino-German car venture, said on Wednesday that it and Volkswagen AG would jointly develop a new mid-range sedan for the Chinese and North American markets.

But the new sedan, based on the venture's existing Passat Linyu, will still bear the Volkswagen logo.

Top executives from Guangzhou Honda and the parent Guangzhou Automobile said the venture's new-brand program is the result of its growing scale of economy and localization as well as strong financial and intellectual reserves.

Atsuyoshi Hyogo, Honda's China chief, said the Japanese carmaker will "completely" back the venture's self-development endeavor by providing technical and talent assistance.

"However, creation of a new brand is an unprecedented challenge for the venture," Hyogo said.

Sales of Guangzhou Honda, which started production in 1998, climbed by 7.8 percent year-on-year to 133,173 vehicles in the first half of this year, ranking it No 6 in China's passenger car sector. It aims to sell a total of 310,000 units this year, up from 260,000 units last year.

The venture, one of the most profitable carmakers in China, posted more than 5 billion yuan in 2006 profits.

Eighty-five percent of spare parts for its current models are locally made.

Honda also has a tie-up with Dongfeng Motor Corp in the central city of Wuhan, producing the compact Civic and CR-V sport utility vehicle.

Overall passenger car sales in China, the world's second-biggest vehicle market, jumped 26 percent to 2.55 million units from January to June, according to industry data.

(China Daily July 20 2007)