Iveco, a Fiat Group Company, has finalised a joint venture agreement with the SAIC Motor Corporation, one of the leading Chinese automotive manufacturers, and the Chongqing Heavy Vehicle Group, to establish a long-term partnership in China in heavy commercial vehicles. The Shanghai-based SAIC Motor Corporation is one of the three largest auto-makers in China. It sold over 682,000 vehicles in the first half of 2006 and has more than 56,000 employees.
Once the agreement is approved by Chinese central authorities, Iveco and SAIC will establish a 50-50 joint venture, under the name of SAIC Iveco Commercial Vehicle Investment Company. This company then intends to acquire a 67 per cent share in Chongqing Hongyan Motor, a subsidiary of Chongqing Heavy Vehicle Group.
The agreement will see the construction of a new production plant in Chongqing with a total investment of approximately Rs 700 crore (120 million euros), of which Iveco will be responsible for Rs 237 crore (40 million euros). This is intended to support a volume increase from the current 15,000 to 40,000 heavy commercial vehicles in the medium term.
Current plans allow for the assembly of the Iveco Stralis range of heavy trucks, together with product and manufacturing related improvements in the Chongqing range. This is aimed at consolidating and reinforcing the current product range, whilst developing new opportunities with vehicles which offer the best mix of local and European components and technologies.
"The agreement is part of a broad plan for Iveco’s development in China," said Paolo Monferino, Iveco’s chief executive officer. "Iveco considers China as a priority," he added, "not only because of its market’s size, growth rate and the cost of manufacturing, but because local engineering knowledge is outstanding and there is significant potential for global product planning. The partnership with SAIC is an important milestone in our strategy."