China Automotive Systems Inc (CAAS), a leading power steering components and systems supplier in China, Monday announced that its Board of Directors has approved the formation of a joint venture in Brazil to target the largest automotive market in South America.

According to a company release, the new joint venture, which will be 80% owned by CAAS’s wholly own subsidiary, Hengsheng, will be based in Sao Paulo and established with two local Brazilian automotive partners, with ownership of 15% and 5%, respectively.

Mr. Hanlin Chen, Chairman of China Automotive Systems, stated, “Brazil is the most important economic engine in South America, and China has surpassed the United States as Brazil’s leading trade partner. The automotive market is on the rise in Brazil, with current annual OEM demand estimated at 3.5 million vehicles and a rapidly growing aftermarket sector.

CAAS has seen Chinese automakers, such as Chery Auto, one of its largest customers, successfully penetrate the Brazilian market with high quality, value-added vehicles and believes it can also leverage this trend.

According to Chen, CAAS local partners have proven track records in production and distribution.

“The company believes its strong product development capabilities and high quality control processes for mass production will create tremendous value for local OEM and aftermarket customers. This joint venture will enable the company to capitalize on the significant growth opportunities presented by Brazil and South America, as a whole,” said Chen.

Based in Hubei Province, the People’s Republic of China, China Automotive Systems, Inc. is a leading supplier of power steering components and systems to the Chinese automotive industry, operating through nine Sino-foreign joint ventures. The Company offers a full range of steering system parts for passenger automobiles and commercial vehicles.

The Company currently offers four separate series of power steering with an annual production capacity of over 3.5 million sets, steering columns, steering oil pumps and steering hoses.

Its customer base is comprised of leading Chinese auto manufacturers, such as China FAW Group, Corp., Dongfeng Auto Group Co., Ltd., BYD Auto Company Limited, Beiqi Foton Motor Co., Ltd., Chery Automobile Co., Ltd. and Chrysler North America outside of North America.

The Brazilian foray will serve as a platform from where to launch the Chinese auto manufacturer’s products in Latin America.