China’s increasingly strict environmental standards define how heavy trucks are powered and built, and the result is the formation of some powerful unions.
Man, the world’s third largest heavy truck producer after Benz and Volvo, announced in middle October that it had acquired a 25% stake in Sinotruk, China’s top heavy truck builder, for $828 million. It also said it would provide engine technology for Sinotruk to meet State IV emission standards, roughly equivalent to EU pollution standard and this will be in force by the beginning of 2011.Daimler, the parent company of Benz, and Beijing-based truck maker Foton now have an agreement to set up a joint venture in January 2010 to use the Benz engine and produce heavy trucks under the Foton brand. Co-investing $937.4 million each, each side will own 50 percent of the JV.
Jianghuai Auto Company (JAC), Central-China’s Anhui-based truck maker, has reached a framework agreement with NC2, a US-based heavy truck and diesel engine maker, to invest $293 million and provide cleaner engines for JAC’s heavy trucks.
Unlike the passenger vehicle market where joint-venture brands dominate, the heavy truck market is currently 95% held by domestic brands, with top five makers Sinotruk, Dongfeng, FAW, Shaanxi Auto and Foton sharing more than 80% of it.
Alibaba reported Li Menghai of TX Investment Consulting as saying that by entering China, European truck makers are also looking at emerging markets such as Russia and Brazil.
Li Menghai said, "Chinese truck makers understand the emerging markets better than their Western rivals. We offer cheap but usable stuff. We know what the poor need because we are poor too."