SHANGHAI, June 11 Caterpillar Inc (CAT.N) and
Navistar International Corp (NAV.N) are finalising a 4 billion
yuan ($586 million) truck and engine manufacturing tie-up with
China's Jianghuai Automobile (600418.SS), 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 Reuters.
"There will actually be two joint ventures. The engine
venture is meant to be a supplier for the truck project," said
"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 (DAIGn.DE) and other European
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.
(Reporting by Fang Yan and Jacqueline Wong)