BEIJING, Jan 26 (Reuters) - Swedish heavy truck producer AB Volvo said on Saturday it had signed an agreement with China’s Dongfeng Motor Group Co. to create a new commercial vehicle joint venture in China, pending official approval.
AB Volvo said in a media release it would take a 45 percent stake for 5.6 billion yuan ($900.25 million).
It said the two firms would form the new venture — Dongfeng Commercial Vehicles — after Dongfeng separates an existing commercial vehicle unit from the Chinese company’s joint venture with Japan’s Nissan Motor Co..
Nissan said that transaction has been agreed with Dongfeng, although the financial details were not immediately available and a Nissan spokesman declined to comment.
That existing truck unit has been producing and selling passenger cars and other light-duty vehicles, as well as heavy commercial vehicles, since the early 2000s.
“Combining Dongfeng’s strong domestic position and know-how with the Volvo Group’s technological expertise and global presence will offer excellent potential for growth and profitability in and outside China,” AB Volvo President and CEO Olof Persson said in a statement.
AB Volvo is one of the world’s biggest manufacturers of heavy-duty trucks, selling a total of about 180,000 vehicles in 2011. Dongfeng is an even bigger producer, with total commercial-vehicle sales amounting to 186,000 vehicles in 2011.
Of those 186,000, AB Volvo said about 142,000 units were produced by the part of the company that will be included in the new joint venture.
It said completion of the transaction is subject to certain conditions, including the approval of relevant anti-trust agencies and Chinese authorities.
$1 = 6.2205 Chinese yuan Reporting By Norihiko Shirouzu; Editing by Paul Tait