(Yicai Global) Feb. 10 -- Chinese commercial vehicle giant Beiqi Foton Motor has unveiled a plan to set up a third joint venture plant with ZF Group, a German auto parts maker.

The pair will build a factory in Jiaxing, Zhejiang province to make automatic gearboxes for mid-sized trucks, the Beijing-based firm said in a statement late yesterday. The project’s first phase will reach designated capacity of 55000 units annually next year, while the schedule of the second phase will be adjusted based on sales and the market situation, it added.

Foton did not reveal the total cost of the project but said the plant’s fixed asset investment will be CNY130 million (USD19.2 million). The shareholding ratios of the two companies will be decided later, depending on the proportion of the plant’s sales to Foton and third-parties.

ZF’s gearboxes for mid-sized trucks have great competitive advantages in China, and the plant will help Foton improve its competitiveness in that market segment, cut production costs, and ensure a stable supply of core parts, Foton noted.

Foton and ZF already have two JV plants in Jiaxing. The first, in which Foton owns 60 percent, has an annual production capacity of 320,000 gearboxes for light-duty vehicles. The second, of which it owns 49 percent, can turn out 190,000 gearboxes for heavy-duty trucks a year.

Foton also has a JV plant for commercial vehicles with Mercedes-Benz Group, formerly known as Daimler, according to the Chinese company’s website.

Shares of Foton [SHA: 600166] closed down 1.2 percent at CNY3.34 (49 US cents) today.

Editor: Futura Costaglione