Caterpillar and Navistar International are discussing a joint-venture agreement with China’s Jianghuai Automobile to enter China’s $22 billion heavy truck industry. If successful, the two companies will join Daimler, reported Reuters. Caterpillar and Navistar and Jianghuai will each hold 50 percent. The deal is expected to be finalized by the end of the year. Jianghuai will gain a more diversified line of cars and trucks as well as potential international exposure. Chinese government stimulus measures have ignited heavy truck sales in China which rose 11.75 percent to 541,256 units in 2008, more than double the level in 2003, according to Nomura Securities. However, foreign truck makers have been handicapped by their more expensive models. “Foreign truck makers face a much bigger challenge in China comparatively because an Audi is a status symbol, while a Volvo truck can only push up trucking firms operating cost,” said Chen Qiaoning, an industry analyst with ABN AMRO TEDA Fund Management. Demand for foreign trucks is expected to increase as the Chinese government raises vehicle emission standards further, forcing trucking firms to replace their gas-guzzlers, analysts said.
Caterpillar, Navistar Close to Chinese Joint Venture
Caterpillar and Navistar are closer to establishing a foothold in China’s rapidly growing trucking industry.
August 21, 2009