Nidec Corp. will form a joint venture with GAC Components Co. Ltd., a subsidiary of Chinese car maker Guangzhou Automobile Group Co. Ltd., as it forays into low-cost traction motors.
The new company, tentatively called Guangzhou Nidec Auto Drive System Co. Ltd., will have 600 million Chinese yuan in registered capital. Nidec will own 51% of the venture, while GAC Components will hold the remaining 49%.
The company will be based in Guanzhou, Guangdong province, and will develop, produce, sell and provide after-sales service of automotive traction motor systems and components.
The deal will be executed between September and October. Nidec does not expect the transaction to have a significant impact on its consolidated financial performance for the fiscal year ending March 31, 2020.
GAC Components manufactures automobile interior parts and electric components, among others.
As of Aug. 1, US$1 was equivalent to 6.90 Chinese yuan.