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Sweden's Volvo Clinches Deal to Create Heavy-duty Truck Venture
Swedish Volvo Truck Corp yesterday clinched a deal with a Chinese partner to form a joint venture (JV) in East China's Shandong Province after nine years of negotiations.

Under the terms of the agreement, Volvo and partner China National Heavy-Duty Truck Corp (CNHTC) will invest 1.6 billion yuan (US$193.4 million) in the JV, based in Jinan, capital of Shandong.

Both companies will hold a 50 per cent stake in the venture, named Jinan Huawo Truck Co Ltd, for 30 years.

Jinan Huawo Truck Co Ltd will be the first Sino-foreign heavy-duty truck JV in China.

It will produce Volvo's Fl6, FM9 and FM12 trucks, engines and spare parts.

"China has developed into a strategically important market for Volvo trucks. With development of highway networks and emission regulations, demands for high-end heavy trucks (in China) will double over the next 10 years," Volvo President Jorma Halonen said yesterday in Beijing.

"It is essential for Volvo to shift focus to China and build local production bases and gradually involve it in Volvo's global sourcing system," Halonen said. Volvo forecasts China to be the world's No 2 heavy-duty truck market by 2012.

Last year's market increased to 252,845 units from 16,973 units in 1994 when Volvo and CNHTC began its mammoth JV negotiations.

Volvo, the world's No 2 heavy-duty truck maker, expects to realize annual sales of 10,000 units in China through the JV by 2010, according to Halonen.

Currently, China's heavy-duty truck market is mainly controlled by the First Automotive Works Corp and the Dongfeng Motor Corp - the nation's two biggest vehicle manufacturers.

The first Volvo heavy-duty truck will roll off the assembly line of Jinan Huawo Truck Co Ltd within this year, said Halonen. The JV is expected to produce 2,500 Volvo trucks annually by 2005.

(China Daily June 10, 2003)

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