YULIN -- Guangxi Yuchai Machinery Co. will start producing a 2.0-liter diesel engine in mid-2010 in its joint ventures with Zhejiang Geely Holding Group and Zhejiang Yinlun Machinery Co.

The engine will be mounted on at least seven new Geely models, which are intended for export, says Jiang Shihong, general manager of Yuchai's passenger vehicle business division.

"Of the new models Geely plans to launch, including mid-sized sedans, SUVs and vans, many will have diesel versions," he says.

The diesel cars are intended for overseas markets, but may also be sold inside China if the government starts encouraging the use of diesel passenger vehicles, he said.

Jiang says the 2.0-liter engine is being developed by Germany's AVL List GmbH at present. Development of the engine's prototype will be completed in September.

The intellectual property rights of the new engine belong to the joint ventures, he said.

When the new engine goes into mass production in 2010, the initial output will be a few thousand units a year. But Jiang says the volume is expected to increase later.

Earlier this year, Yuchai, Geely and Yinlun set up two joint ventures in Tiantai of Zhejiang province, and Jining of Shandong province.

Yuchai owns 52 percent of both joint ventures. Geely owns 30 percent, and the remaining 18 percent belongs to Yinlun.

The two joint ventures will eventually have a combined annual capacity of 300,000 engines.

Located in Yulin of Guangxi province, Yuchai is a major diesel engine manufacturer in China.

It sold about 380,000 units of diesel engines last year, but all of them were for commercial vehicles or non-vehicle equipment and machinery.

Anticipating a boom in the domestic diesel passenger vehicle market, Yuchai hired Germany's FEV Motorentechnik GmbH in 2004 to develop a 1.2-liter aluminum-based diesel engine for passenger vehicles.

But due to a lack of government support and lack of high quality diesel supply on the domestic market, the boom Yuchai expected didn't materialize.

As a result, Yuchai hasn't started commercial production of the engine yet.

                    Author:  Kevin Huang   Source:  Automotive News  China