The Chinese Government had approved an engine joint venture between Ford Motor Co. (F), Mazda Motor Corp. (7261.TO) and Changan Automotive Group, the three automakers said in a joint statement Wednesday.

The Nanjing-based joint venture is called Changan Ford Mazda Engine Co. and its factory is designed to make up to 350,000 engines per year.

It could be expanded in the future in line with the three companies' needs, it said.

The factory is scheduled to start operations in 2007 and will mainly supply engines to Ford's joint venture with Changan in Nanjing.

The new facility will also supply engines to the partners' other operations in China that make Ford and Mazda brand products.

The new plant is part of Ford's planned US$1 billion-plus investment in China that it disclosed in October.

Despite a slowdown in China's auto sector last year, foreign carmakers have poured more money into the country in a bid to gain a stronger foothold in the market.

"The new engine project will further strengthen the three parties' cooperation and their respective competitiveness in China," Mei-Wei Cheng, chairman and chief executive of Ford Motor (China) Ltd., said.

Song Hu, an analyst at Haitong Securities in Shanghai, said the move would cut costs and shorten product delivery times for the automakers, which previously imported their engines.

..Source: Shenzhen Daily