Hyundai Motor Co. finalized the deal with China’s Sichuan Nanjun Automobile Co. to establish a commercial vehicle plant in China on Thursday.

The two companies had signed a memorandum of understanding on setting up a joint venture in October.

Sichuan Nanjun Automobile Co. is China’s 11th-largest producer of commercial vehicles. The company operates two plants with a combined annual production capacity of 120,000 units.

Under the deal, Hyundai and Sichuan Nanjun will invest 600 billion won ($559 million), each covering 50 percent of the investment, to set up Sichuan Hyundai in Ziyang, Sichuan province during the second half of the year.

Sichuan Hyundai will acquire Sichuan Nanjun’s existing production facilities and build a new plant by 2013. Once the new plant is completed, the joint venture will be able to produce 150,000 trucks and 10,000 buses on an annual basis, Hyundai Motor officials said.

The Korean carmaker said that Sichuan Hyundai will continue to produce Sichuan Nanjun’s current lineup in order to promote the new Sichuan Hyundai brand in the Chinese market, and introduce new models to the lineup in the future.

The carmaker added that Sichuan Hyundai will market Sichuan Nanjun’s current lineup to target the lower end of the market, and introduce Hyundai Motor’s commercial vehicles including the Mighty truck to tackle the market for high-end commercial cars in the world’s largest automotive market.

According to Hyundai Motor, China is the world’s largest market for commercial vehicles. Last year about 4.3 million commercial vehicles were sold in the Chinese market, and the volume is projected to reach 5.2 million units in 2015, fueled by China’s rapid urbanization, the company said.

Saying that the latest joint venture deal has allowed the company to establish operations spanning production to sales and after-sales services for commercial vehicles in China, Hyundai Motor set this year’s commercial vehicle sales target at 73,000 units. The company plans to more than double the figure in 2015 to 160,000 units to take up 3 percent of China’s market for commercial vehicles.

By Choi He-suk  (cheesuk@heraldcorp.com)