French firm Renault Trucks plans to launch a joint venture with Dong Feng Liuzhou Automobile Ltd to manufacture heavy-duty trucks in China, a Renault manager said yesterday.
A framework agreement has been signed and the project is awaiting governmental approval, said Kuai Jun, project officer at Renault Trucks (Shanghai) Co Ltd.
"At present, we are discussing details with our Chinese partner. If approved soon, the project is expected to start by the end of this year," Kuai said.
The projected cost of the venture is just less than 1 billion yuan (US$121 million), with Dong Feng holding a 50 per cent stake, Renault Trucks 32 per cent and Japan's Nissan 18 per cent.
Renault will pump 20 million euros (US$26.6 million) in cash into the venture, and its advanced technology will be transferred as part of the deal.
The partnership is expected to increase the annual output of Chenglong trucks manufactured by the Liuzhou company from 20,000 to 60,000 in 2010.
Renault Trucks has also announced it will launch a 50-50 joint venture with Liuxin Stamping Ltd to manufacture drivers' cabs.
Kuai was speaking to China Daily at an opening ceremony for Renault Trucks' first flagship dealership in China in Shanghai yesterday.
"The new dealership is a firm effort made by Renault Trucks to enlarge its market in China," said Bruno Arabian, managing director of Renault Trucks China.
The Shanghai dealership, which cost 15 million yuan (US$1.82 million), is a co-operative project with Shanghai Fullwon Industrial Co Ltd.
"The heavy-duty truck market is growing fast, though at the moment sales are not as good as expected," Fullwon General Manager Geng Jiakang said.
The French truck manufacturer plans to establish a network of 30 dealerships in China by the end of 2006.
"We aim to secure 10 per cent of China's truck market over the next three years," said Arabian.
Renault Trucks debuted in the Chinese market last year by selling less than 100 trucks, but this figure will rise to about 400 vehicles this year following its efforts to improve its sales network, said Kuai.
Renault Trucks unveiled its new long haul Magnum vehicle at this year's Shanghai Auto Show.
United States-based Eaton Corporation, a diversified industrial manufacturer, believes China's truck market has a bright future.
James Sweetnam, senior vice-president and group executive for Eaton's truck business, said the firm's ventures in Xi'an, Shaanxi Province and Changchun, Jilin Province will increase the production of automated heavy-duty and medium-duty transmissions for China's truck and bus markets.
China imported more than 5,000 heavy-duty trucks from Europe and more than 10,000 from Japan last year. Domestic manufacturers supplied 150,000 heavy-duty trucks.
Renault Trucks will compete with AD Volvo Group, Germany's Benz and Italy's Iveco in the Chinese market.
"It has targeted a 20 per cent market share of European products sold in China since the Chinese market is expected to demand about 800,000 heavy-duty trucks in 2010," Kuai said.
(China Daily April 25, 2005)