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Iveco and SAIC Motor finalize commercial vehicle JV, sign MOU for diesel engine production

Shanghai – Fiat Group subsidiary Iveco has finalized a joint venture agreement with SAIC Motor Corp, Ltd. and Chongqing Heavy Vehicle Group to establish a long-term partnership in China in the field of heavy commercial vehicles.
Once the agreement, signed in July, is approved by the Chinese central authorities, Iveco and SAIC will establish a 50:50 joint venture under the name of SAIC Iveco Commercial Vehicle Investment Co., Ltd. This company’s first move will be to acquire a 67 percent share of Chongqing Hongyan Motor Co. Ltd, which is a subsidiary of Chongqing Heavy Vehicle Group.
The agreement also includes an increase in the registered capital of the JV, prior to the construction of a new production plant in Chongqing. The total investment will reach approximately 120 million euros ($154 million), of which Iveco will contribute 40 million, in an attempt to increase production from the current 15,000 heavy commercial vehicles to 40,000 units in the not too distant future.
Industrial plans include the assembly of Iveco heavy commercial vehicles (Stralis range), improvements to products and processes in Chongqing, consolidation and reinforcement of offers on the local market, and the development of vehicles incorporating the best mix of local and European components and technologies.
“The agreement is part of a broad plan for Iveco’s development in China,” said Paolo Monferino, Iveco CEO. “Iveco considers China as a priority because of its market size, growth rate and cost conditions. Here, engineering knowledge is outstanding, as well as the potential for global product planning. (And) the partnership with SAIC is a milestone in our strategy.”
Iveco and Fiat Powertrain Technologies (FPT), another subsidiary of Fiat Group, also signed an understanding with SAIC Motor in July to establish a long-term partnership in China in the field of medium and heavy diesel engines.
Industrial plans for this partnership include the production of three different medium and heavy engine ranges: the F5, NEF (in both 4- and 6-cylinder versions), and the Cursor 9, with an investment of more than 150 million euros. Output is expected to reach 30,000 units by 2008.
Iveco, SAIC Motor and Chongqing Heavy Vehicle Group signed a framework agreement last December for joint venture heavy commercial vehicle and diesel engine projects. This came after SAIC Motor and Iveco also signed a framework agreement in July 2005 to establish the SAIC Iveco commercial vehicle JV.
<photo: Iveco Stralis heavy-duty truck.jpg; courtesy of Iveco>

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