Hyundai Motor has signed an agreement with China’s Baotou Bei Ben Heavy-Duty Truck Company Ltd to establish a new medium and heavy truck joint venture in China in 2010. The new company, in which the two partners will each have a 50% stake, will take over Baotou Bein Ben’s existing truck operations, which have a combined production capacity of 40,000 units per year.
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Baotou Bei Ben is controlled by China North Industries Group and is China’s sixth-largest heavy trucks manufacturer. It operates three separate production plants in Batou City in Inner Mongolia. A total of USD 400 million will be invested in the new joint venture company, increasing overall capacity to 100,000 units per year by 2014.
Hyundai Motor said it had been seeking to penetrate China’s commercial vehicle market for some time and that this alliance represents a golden opportunity for the company. Previous joint venture agreements in the mid-2000s with Jianghuai and Automobile and Guangzhou Automobile failed to progress.
Choi Han-young, vice chairman at Hyundai’s commercial vehicle division, said China accounted for around 29% of global medium and heavy truck sales in 2008. He added that further strong growth will come as a result of new infrastructure development projects in the country’s interior.
Mr Choi pointed out that global truck makers so far have not expanded aggressively in China and this represents a significant opportunity for his company. He added that this new alliance will help achieve Hyundai’s target of selling more than 200,000 commercial vehicles worldwide by 2013.
The new joint venture will initially focus on revamping Baotou Bei Ben’s existing products, which includes a broad range of dump trucks, road tractors, special vehicles includes municipal vehicles, cement mixers and tankers, many of which are produced under licence from Mercedes-Benz. The first model based on Hyundai technology will be launched in 2012.
Tony Pugliese
