The deal was clinched between Shanghai GM - a joint venture between General Motors and Shanghai Automotive Industry Corp -and CAMI Automotive Inc, the US carmaker's Canada-based joint venture with Suzuki Motor Co of Japan.

Shanghai GM will supply its 3.4-litre V6 engines to CAMI Automotive, the Chinese joint venture said in a statement.

The engines will power the new Chevrolet Equinox compact sport utility vehicles (SUVs) to be marketed by GM in 2004.

But Shanghai GM has not revealed how many engines will be exported annually.

"The deal will be an outstanding one in terms of volume in China's auto industry," an official of Shanghai GM said, adding that the two joint ventures will sign a contract soon.

"This is a further example of how GM's global alliance and partnership strategy are giving us the flexibility to use existing capacity at facilities like Shanghai GM for the benefit of car buyers in other parts of the world," said Philip Murtaugh, chairman and chief executive officer of GM's China operation.

The deal comes one year after Shanghai GM agreed with the US carmaker's Philippines branch to export 5,000 10-seat Buick GL10 commercial wagons to the Southeast Asian nation within five years.

Shanghai GM said it has sold more than 900 GL10s - a redesign of its Buick GL8 - through GM's sales network in the Philippines so far this year.

According to Chen Hong, president of Shanghai GM, the engine exports will be an important step towards the joint venture's goal to become a globally competitive automaker.

"Only by becoming part of the worldwide automotive industry and using our parent companies' strengths can Shanghai GM and China's automotive industry thrive in the face of growing competition," Chen said.

The joint venture's facility has an annual production capacity of 180,000 V6 engines, 75,000 L4 engines and 100,000 automatic transmissions.

It is building 2.5- and 3.0-litre V6 engines for domestic use.

According to Shanghai GM, it sold around 91,000 vehicles during the first 10 months this year, including mid-sized Buick sedans, Sail compact cars and GL8 commercial wagons. The figure was up 70 per cent on the same period of last year.

CAMI Automotive, set up in 1989 with a total investment of US$500 million, makes GM's chevrolet Tracker and Suzuki's Vitara SUVs.

(China Daily November 5, 2002)