Navistar, JAC sign pacts to produce, market trucks, engines in China

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An affiliate of Navistar International Corp. and Anhui Jianghuai Automobile Co. Ltd. On Thursday, Sept. 16, signed a joint venture agreement to develop, build and market advanced diesel commercial engines in China. An affiliate of NC2, a joint venture between Navistar and Caterpillar Inc., also signed a joint venture agreement with JAC to develop, build and market advanced commercial vehicles in China. The deal is pending approval by the necessary Chinese Government authorities.

JAC is a leading China-based maker of commercial and consumer vehicles and engines. The engine joint venture will establish a research and design center in China’s Anhui Province for application engineering development, product design and technology advancements, to support the truck joint venture and other engine requirements of JAC’s product portfolio. A dedicated manufacturing facility in Hefei, Anhui Province of China will be constructed to produce JAC and the Navistar-designed MaxxForce brand diesel engines. The truck joint venture will build vehicles at an existing 800,000-square-foot JAC manufacturing facility dedicated to medium- and heavy-duty trucks.

The engine joint venture will focus on meeting emerging needs of the Chinese commercial truck market with Euro IV- and Euro V-compliant technology. JAC’s 2010 vehicle sale estimates in the combined commercial vehicle segments of light heavy trucks are 200,000 units. Diesel engines produced by the new venture will be used in China.

The truck and engine agreements are integrated to support the advanced technology power requirements of a number of medium- and heavy-duty vehicles, which include the JAC Sword and Gallop brands and International Brand TranStar, positioning JAC products in China to meet the increasing demands of the Chinese market. Engines supporting the full range of commercial trucks include the JAC existing products and a wide range of Navistar MaxxForce brand engines.

“These joint ventures represent a significant step in Navistar’s global growth,” says Daniel C. Ustian, chairman, president and chief executive officer. “This is consistent with our strategic platform of leveraging the technical capabilities and assets of great companies. Navistar recognizes the importance of the Chinese market, and this venture with a strong partner such as JAC enables us to establish a firm foothold in China as we grow our business in the Asia Pacific region.”

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Formation of the joint ventures is subject to finalization of certain procedural steps and the finalization of certain ancillary commercial agreements among the parties. “Our partnership with Navistar will bring cutting-edge diesel and commercial truck technology, providing products with great fuel economy and durability, and will enable JAC to continue leading in the commercial vehicle market in China and to grow globally,” says Zuo Yan An, JAC chairman.