(Yicai Global) June 21 -- The Dongfeng Yulon Motor joint venture of Wuhan, Hubei-based Dongfeng Motor and Sanyi, Taiwan-based Yulon Motor is suffering declining sales.

The JV now has only 1,000 staff and monthly sales of 114 vehicles, Yicai Global recently discovered at its Hangzhou plant.

Dongfeng Yulon Motor, founded in 2010 with a capitalization of USD490 million, makes cars under its own Luxgen marque. Its sales started to plunge after reaching a peak of 60,000 vehicles in 2015. It sold only 7,056 units last year, down 61 percent annually, and its performance this year is even worse

The JV sold only 571 vehicles in May, down 88.4 percent annually, with the monthly average being only 114 units, one of its first-tier suppliers told Yicai Global, adding, "Such low sales cannot support a factory at all."

The JV will close this Hangzhou plant in one to two years, a market source said recently. The factory has already shut down and most of its workers have been furloughed, Yicai Global noted at the site.

The facility now makes only 100 vehicles per month, several workers told Yicai Global at the plant gate. It had 3,000 workers at its peak, but now only 1,000  remain, Yicai Global noted.

"The current situation has many direct causes on the surface, but the most fundamental reason is the 50-50 shareholding ratio. The two shareholders both wanted to have the final say, but neither was willing to listen," a former executive told Yicai Global. The equal shareholding disrupted unified management, and dispersed control, spurring infighting among management, which was at the core of the issue, he added.

Disputes among the shareholders also halted the sales and marketing, a staffer who quit Dongfeng Yulon Motor's sales unit this year said. "Their disagreements were the problem," he added.

When will the JV resume mass production and how will it extricate itself from these difficulties? Yicai Global tried to reach the company to discuss these issues but has as of yet received no reply.

Editor: Tang Shihua, Ben Armour