November 28 2007.

Suzuki Motor Corp. plans to build a new motorcycle factory in China via a joint venture it will set up with the Grand River Group. The new factory will begin operations in the spring of 2009, producing 500,000 motorcycles in the first year and ramping up to more than 2 million units a year in 2014.

Suzuki's existing motorcycle factory in China is operated by Jinan Qingqi Suzuki Motorcycle Co., a company jointly owned with another local company. That factory began operations in 1996 and last fiscal year made 390,000 motorcycles. Suzuki also commissions production to two other firms, one of which is the Grand River Group.

China is the world's largest motorcycle market, accounting for 49% of the 44.15 million units sold globally in 2006. Suzuki's sales in China grew by roughly 20% last fiscal year to the level of 1 million units. However, there are more than 100 motorcycle makers jostling for attention, and Suzuki has had trouble expanding its share past 7%.

By building a second factory and boosting regional production capacity, Suzuki hopes to increase its share of China's motorcycle market. The new joint venture will be set up with an affiliate of the Grand River Group and start with working capital of roughly 13 billion yen. Details are still being ironed out, but Suzuki likely will hold around a 40% share of the venture. A total investment exceeding 30 billion yen will be spent to build a factory in Jiangsu Province for production of 125cc motorcycles.

Source: The Nikkei