Nissan Motor and Dongfeng Motor Group Co will spin off the heavy truck segment of their China venture to Dongfeng’s state parent, paving the way for local production of Renault and Infiniti cars as well as a possible new Dongfeng-Volvo truck tie-up, Chinese media reported on Monday.

Nissan’s passenger car business in the venture will remain intact, as will its light commercial truck production with Shanghai-listed Dongfeng Automobile Co, Sina.com said citing unspecified sources.

Talk of a Dongfeng heavy truck venture with Volvo has been swirling around for years despite both sides having yet to provide any updates on the issue.

The tieup with Volvo is intended to shore up Dongfeng’s heavy truck business as the unit within the venture with Nissan has been making Dongfeng-branded heavy trucks only, the report said.

To get the consent of Nissan, Dongfeng would in turn back producing Nissan’s premier brand Infiniti as well as Renault cars in its venture with the Japanese automaker.

Dongfeng’s spokesman could not be reached for comment. A Nissan representative said the firm had no information on the deal.

Local production, which can guarantee steady supply and cut costs, has been seen as essential for foreign automakers to expand their footprint in the world’s biggest auto market.

BMW, Volkswagen’s Audi and Daimler AG’s Mercedes-Benz, which now dominate China’s luxury car segment, started making cars in China years ago.

Renault SA, part of the Nissan-Renault alliance, is one of the few foreign automakers that has been exporting cars to China, to a lackluster response so far.

Under the Dongfeng-Nissan deal Dongfeng Motor Corp will take over the venture’s heavy truck unit effective July 1, the report said.

However it did not give a timetable for any Dongfeng-Volvo truck partnership or local production of Infiniti and Renault cars.

Volvo pulled out of an alliance with China National Heavy-Duty Truck Corp years ago due to sluggish sales.

Via: EconomicTimes.