Robert Bosch GmbH will invest €600 million ($US705 million) with a Chinese fuel injector firm in a venture to make diesel nozzles for car and truck engines, the Chinese company said on Tuesday, according to Reuters.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
Bosch and its units would have a 67% stake in the venture and China’s Wuxi Weifu the rest, making the German firm the latest multinational to jump on China’s car boom bandwagon, the report said.
A German industry source told Reuters the investment figure of €600 million was exaggerated while Bosch reportedly said the deal had not been finalised and declined to comment on the amount it would invest in the venture.
“We are still in negotiations and we are optimistic that we will come to a conclusion this year,” a Bosch spokesman told the news agency, declining to give any further details.
Total registered capital would be €150 million, Weifu, China’s biggest producer of vehicle fuel injection systems, said in a statement published in the official Securities Times on Tuesday and cited by Reuters.
The news agency noted that commercial vehicles are an important component helping to drive economic growth in China, where cities hum 24 hours a day to the sound of construction and industrial output in October was 17.2% higher than a year earlier, the fastest clip since an annual 19.8% registered in February.
The joint venture (JV) would be based in eastern Wuxi, close to the country’s commercial capital of Shanghai, Reuters said.
“With China’s economic development the demand for vehicles with these engines is booming. We are very bullish about the prospects for the JV,” Weifu’s board secretary Liu Yonglin reportedly said.
The venture would supply nozzles for diesel engines mainly in trucks to start with, but would expand rapidly into cars once the fuel becomes more popular in the country, he told Reuters.
The news agency said Bosch is the strategic partner and the second-largest shareholder of Weifu, which is listed on the Shenzhen stock market.
Reuters noted that China is planning to raise the proportion of vehicles using diesel from about 30% at present to 35% by 2005, mainly for commercial vehicles while the government is also improving emission standards, mandating all vehicles reach Euro II by next year and the more stringent Euro III by 2008.
Weifu’s net profit jumped an annual 11.31% in the first nine months of the year on the back of China’s sizzling car market, Reuters added – car output in China surged an annual 87.2% to 1.44 million during the same period, official figures show.
Reuters noted that, in April. Cummins set up a $US100.6 million venture with China’s Dongfeng Automobile to make 130,000 diesel engines a year and Weifu supplies parts to this plant.
