Both companies will evaluate the possibility of forming a joint venture to develop new models, Proton said in a statement. They will spend three months to complete the study, it said.

Hawtai, which is based in Beijing, has the capacity to produce up to 350,000 vehicles a year. The privately held company has been trying to upgrade its model lineup with foreign technology. In May, Hawtai agreed to acquire as much as a 29.9 percent stake in Spyker Cars NV, owner of Saab Automobile AG, in return for an investment and loan totaling 1.4 billion yuan.

Under that agreement, Hawtai and Spyker would have produced Saab-brand vehicles in China. But the deal fell apart days after it was announced.