DEUTZ AG and FAW Jiefang Automotive Co., Ltd., which is based in Changchun, China (FAW), a wholly-owned subsidiary of China First Automobile Works Group Corp. (FAW Group), have signed a contract to set up a joint venture to manufacture and sell diesel engines.
DEUTZ and FAW will each own a 50% stake in the joint venture, which will operate under the name of DEUTZ (Dalian) Engine Co., Ltd. (DEUTZ Dalian). DEUTZ will assume industrial leadership of the company and will invest the equivalent of EUR60 million in the new company. The joint venture will be based in Dalian. The contract is still subject to the usual approvals for transactions of this nature. The establishment of DEUTZ Dalian will considerably expand the co-operation that has already existed for over 10 years between DEUTZ and FAW Group.
FAW will contribute to the joint venture particularly its new cutting-edge plant that manufactures licensed DEUTZ engines. Production commenced earlier this year. Its initial annual capacity as from 2007 will be 50,000 engines, and this could eventually be increased to 100,000 engines. It will manufacture engines with a capacity of between 4 and 7 litres that meet the current emission standards. The engines will be used in commercial vehicles and in industrial applications such as construction equipment and agricultural machinery. They will mainly be sold to international DEUTZ clients in Asia and to the FAW Group.
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