AB Volvo said on Monday it had struck a deal to buy a heavy duty truck subsidiary of Jiangling Motors Corp (JMC) (000550.SZ) for about 1.1 billion Swedish crowns ($125.7 million) to make trucks in the world’s biggest vehicle market.
The acquired business includes a manufacturing site in China’s northern city of Taiyuan. Volvo said it aimed to start production of its new heavy duty Volvo FH, Volvo FM and Volvo FMX trucks there at the end of next year.
The plant will have an annual production capacity of 15,000 trucks within a few years, with the potential to increase capacity further, Volvo said.
Chinese Geely (GEELY.UL), which owns passenger car company Volvo Cars, also holds a stake in AB Volvo. U.S. automaker Ford (F.N) holds a stake in JMC, which makes Ford-branded vans and sport-utility vehicles in China.
Global truck makers are planning truck production in China due to the booming logistics services, including e-commerce, and new orders as authorities introduce increasingly tougher safety and emission regulations.
Scania, a unit under Volkswagen AG’s (VOWG_p.DE) commercial vehicle arm Traton SE (8TRA.DE), is building a wholly-owned factory in an eastern Chinese city, while a joint venture between Daimler (DAIGn.DE) and Foton (600166.SS) said it would make Actros heavy duty trucks there.
($1 = 8.7506 Swedish crowns)