Charoen Pokphand (CP) Group and China's Foton Motor Group have set up a joint venture in Thailand to make all vehicles types under an investment of 500 million baht.
The two conglomerates signed a contract on April 25 during the second Belt and Road Forum for International Cooperation in Beijing.
The contract includes the establishment of a joint venture in production, sales and marketing of locally assembled vehicles in Thailand and Southeast Asia.
Noppadol Chearavanont, vice-president for industrial business at CP, said the new joint venture will receive support from Foton in terms of commercial sales, automotive energy products and production technologies, as well as onboard communication systems.
Meanwhile, CP will take responsibility for finance and establishing customer relations.
The new company will make pickups, big trucks, buses and passenger cars.
"Foton has given permission for usage of the brand and trademark in this alliance," Mr Noppadol said. "Both companies will contribute to further investment in the production of various models and brands such as Auman, Aumark and AUV bus in order to develop the Southeast Asia market."
This project is the second joint venture between CP and the Chinese company. The first was in 2012 when CP joined with SAIC of Shanghai to set up SAIC Motor-CP Co for production and distribution of MG cars.
The assembly plant for MG cars is in Chon Buri and has a production capacity of 100,000 units a year.
The brand was ranked eighth in the Thai market based on sales volume in the first quarter of 2019, up from 10th in 2018.
The Foton brand has tried to enter Thailand for the past several years. The first step was to name a local authorised distributor and assembler, United Motors Co.
Foton then took charge of all local administration from United Motors in late 2016 and hired Bangchan General Assembly Co (BGAC) to make Foton's pickups and passenger cars. United Motors took production responsibility for big trucks.
Still, Foton has limited sales volume in pickups and big trucks amid aggressive competition in the local market, led by Japanese brands.
The new joint venture with CP means that Foton has ended its business relationship with BGAC and United Motors.
Gong Yue Qiong, Foton's president, said Thailand has positive indicators in the automotive industry, enabling Foton to grow in Thailand and Southeast Asia.
Foton is aiming for the top three places in the Thai market, currently held by Toyota, Isuzu and Honda.