DEUTZ launch joint venture in China
DEUTZ AG and Changchun-based FAW Jiefang Automotive Co. Ltd, a wholly-owned subsidiary of China First Automobile Works Group Corp. (FAW Group), are to set up a joint venture to manufacture and sell diesel engines, subject to the usual approvals for transactions of this nature.
Both companies will own a 50% stake in the joint venture, which will operate under the name of DEUTZ (Dalian) Engine Co. Ltd. DEUTZ will assume industrial leadership of the company and will invest the equivalent of €60 million in the new company. The joint venture will be based in port city of Dalian, in north-east China.
DEUTZ say the establishment of DEUTZ Dalian will considerably expand the co-operation that has already existed between the two companies for over 10 years. FAW’s contribution to the joint venture will include their new cutting-edge plant, which manufactures licensed DEUTZ engines. Production commenced earlier this year and annual capacity, as from 2007, will be 50,000 engines; this could eventually be increased to 100,000.
The plant will manufacture emission-compliant engines with capacities ranging from 4 litres to 7 litres for use in commercial vehicles and industrial applications, such as construction equipment. They will mainly be sold to international DEUTZ customers in Asia and to the FAW Group. The joint venture will also have sufficient capacity to manufacture a further 100,000 engines for the local Chinese market.
Commenting at the official signing of the contract, Gordon Riske, chairman of the management board of DEUTZ AG, said: ‘This joint venture presents a unique opportunity to increase our exposure in DEUTZ’s largest regional growth market and, at the same time, to accelerate our growth in the market for 4-litre to 7-litre engines.
‘FAW are also ideal partners for us in our efforts to expand our strategic co-operations, and this will allow us to exploit new markets that have previously been covered by vehicle and equipment manufacturers with their own production facilities.’