Sweden’s Volvo AB today announced signing an agreement with two China-based truck manufacturers to build a $200-million jointly owned engine plant in China. The plant will manufacture complete engines for Volvo as well as its partners, China National Heavy Truck Corp. (CNHTC), and First Automotive Works (FAW).
By 2005 Volvo expects to produce engines from complete knockdown kits imported from Europe. By 2006 the plant is due to begin its own production and by 2010, the plant is expected to roll out 50,000 engines yearly. Most of these engines will be used domestically in China.
“Through establishing an engine plant in China, we will be able to supply our own business areas in China with competitive engines,” said Leif Johansson, Volvo CEO.
Volvo will invest $105 million to have a 52% stake in the venture while CNHTC and FAW will each own 24%.