(Yicai Global) July 6 -- Shuanghuan Driveline, a Chinese manufacturer of gears and shafts, intends to spend as much as EUR120 million (USD131 million) to establish a new plant in Hungary to serve European new energy vehicle makers.

The car parts manufacturer will build the factory in central Hungary's Jaszfenyszaru to respond to its European clients' requests and expand its global market share, the Hangzhou-based firm said in a statement yesterday.

Construction will be done in stages based on factors such as Shuanghuan's capacity planning, downstream market demand, and financing progress, but a certain level of production capacity should be reached by 2026. If everything goes right along the process, Shuanghuan will increase its investment.

As the penetration rate of NEVs in Europe is surging, the demand for high-precision gears and related parts is likely to grow substantially. By setting up a plant in Europe, Shuanghuan can swiftly build a supply chain and sales channels in overseas markets, it added.

The project will make use of Hungary’s advantages of a skilled workforce and low production costs, as well as its location in Europe, the company said. However, the undertaking is still subject to approvals from Chinese and Hungarian regulatory authorities.

Shares of Shuanghuan [SHE:002472] rose as much as 3.8 percent intraday but closed only 0.4 percent up at CNY34.00 (USD4.70) as major mainland bourse indexes continued to decline.

Editor: Emmi Laine