Dongfeng Motor Co Ltd announced it would team up with Japan's Nissan Motor to build a new plant in China as part of a mid-term expansion plan for a stronger market position and to be globally competitive.

Both companies have agreed to invest a combined US$145 million for the new light commercial vehicle factory, Dongfeng and Nissan said in a statement yesterday.

The plant, located in Henan Province in central China, will start production in 2010 with an annual output of 120,000 units. The new facility would also become Nissan's fifth vehicle production plant in China.

Dongfeng, China's third-largest auto maker, said the establishment of the new factory is part of its aggressive development during the next five years ending 2012, including increasing sales, having a complete product mix and boosting research and development capability.

In the ambitious five-year Plan 13 ("one cubed") released yesterday, Dongfeng aims to lift its vehicle sales to more than 1 million units by 2012, up from 610,000 vehicles last year. It also targets a revenue of 100 billion yuan (US$14.29 billion) by then.

Dongfeng said more than 10 new passenger vehicles under the Nissan brand will be launched during the period to help boost sales.

More than five new light commercial vehicles under the Nissan and Dongfeng brand names will be added to the line-up.

In order to enhance cost competitiveness, Dongfeng said it also aims to increase the localization of spare parts used in its passenger cars from 70 percent last year to 90 percent in 2012.

The number of dealerships will also rise from 550 to 800 by 2012.