Caterpillar, Navistar near $586M China truck tie

Posted June 11, 2010 at 11:35 a.m.

Reuters | Caterpillar Inc and Navistar International Corp are finalising a 4
billion yuan ($586 million) truck and engine manufacturing tie-up with
China’s Jianghuai Automobile, a source with direct knowledge of the deal
said on Friday.

Initial investment in the project will be twice as much as the amount
previously disclosed — 2 billion yuan — as Jianghuai and Navistar are
also planning a separate 50-50 diesel engine tie, the source told

“There will actually be two joint ventures. The engine venture is meant
to be a supplier for the truck project,” said the source.

“The partners have already reached agreement on major issues. They are pouring over some technical details now and the case could be closed pretty soon.”

Initial capacity of the heavy truck project, to be based in Jianghuai’s home base in the eastern city of Hefei, is 40,000 units, said the source.

Under a prior framework agreement in September 2009, only a 2 billion yuan 50-50 heavy truck venture between Jianghuai and NC2 Global, a tie-up between Caterpillar and Navistar, was announced.

Jianghuai, Caterpillar and Navistar executives could not be immediately reached for comment.

The deal, if it goes ahead, will make Caterpillar and Navistar the latest entrants in China’s 150 billion yuan heavy truck market, joining Daimler AG and other European rivals.

It would also provide a new growth opportunity for Jianghuai, a major player in China’s multi-purpose vehicle segment which is diversifying into car and heavy truck manufacturing.

Trucks made at the venture will be sold in China and emerging markets in Asia to begin with, the source said.

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