Japanese truck maker Hino Motors plans to shut down its Chinese diesel engine production subsidiary, Shanghai Hino Engine Company, after more than 20 years of operation, citing deteriorating market conditions.

Shanghai Hino, a joint venture 70% owned by Hino Motors and 30% by state owned Guangzhou Automobile Group, was established in 2003 producing diesel engines for local commercial vehicle and construction machinery manufacturers.

At a board meeting earlier this month, Hino Motors rubber stamped the decision to cease operations at the company by the end of September after management concluded it was “unlikely that the business of Shanghai Hino will grow in a sustainable manner” due mainly to growing sales of electric commercial vehicles and construction machinery in the country.

The company said it had “decided to withdraw from this business and dissolve its consolidated subsidiary. Manufacturing will cease at the end of September 2024, after which dissolution procedures will begin promptly”.

Hino said in a statement: “We would like to express heartfelt thanks for the support and efforts of our customers, suppliers, distributors, affiliates, authorities and local communities who have supported the business of Shanghai Hino so far. While appreciating employees and their family members, we will support them through open communication with them until the dissolution and liquidation of the business, and deal with the treatment of employees, including compensation, in good faith.”

The company said it would continue to supply spare parts and provide aftermarket services to existing Chinese customers after the closure.