Sweden’s Volvo Trucks this week announced it has agreed to acquire Chinese truck-maker JMC Heavy Duty Vehicle Company Ltd in a deal worth CNY800m (US$123m), as it looks to further strengthen its sales in the Asia-Pacific region.

JMC Heavy Duty Vehicle is a subsidiary of Jiangling Motors Company Ltd with a manufacturing plant in Taiyuan in China’s Shanxi province. Volvo Trucks said it plans to invest in a new plant at the same site in Taiyuan to produce its new FH, FM and FMX models for the local market from the end of 2022.

The company said it will invest in new stamping, welding, cab-manufacturing, painting and the final assembly facilities for Volvo Trucks, with an annual capacity of 15,000 trucks in the initial phase – with the potential for further expansion later on.

The Swedish company said its sales in China have grown strongly in recent years due to surging demand for logistics services in the country, to reach 4,500 imported heavy-duty trucks in 2020.

Roger Alm, President Volvo Trucks, said in a statement “we are committed to shaping the future of sustainable transport solutions. With our long-standing presence in China, we are growing our sales and we are expanding our strong network of sales and service points together with our private dealer partners”.

He added “over the last couple of years we have seen a fast development of the logistics markets and an increasing demand for our premium trucks and services. To meet the demand from Chinese transport operators, the time is right for us to establish a regional value chain with our own heavy-duty truck manufacturing in China”.

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At the end of last year both Mercedes-Benz and Scania announced separate plans to establish truck manufacturing operation in China, with operations scheduled to start in 2022.

While the Chinese truck market is still dominated by local manufacturers such as SinoTruck, FAW Jiefang, Dongfeng Motor, Foton and JAC, which offer more price-competitive vehicles, European manufacturers are looking to tap into growing demand for premium trucks and services.