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King Long, Higer Bus and Shaanxi Auto to set up tripartite venture

XIAMEN, Fujian – King Long Motor Group Holding Co., Ltd. (King Long) announced on May 27 plans to set up a joint venture company with Shaanxi Automobile Holding Group Co., Ltd. (Shaanxi Auto) and its subsidiary Higer Bus, according to a report on cvworld.cn.

King Long, Higer Bus and Shaanxi Auto will hold 20, 40 and 40 percent shares respectively of the new company, which targets the Northwest China and Central Asia markets.

With registered capital of ¥100 million ($16 million), the new joint venture, or Xi’an King Long Automotive Co., Ltd., will endeavor to design, develop, produce, sell and export buses, bus chassis and bus components. The new company will also provide aftersales services for its products.

The new company will start its business in a rented plant temporarily and build its own plant in Xi’an at a later stage. Phase I of the project will reach a production capacity of 5,000 buses and will relocate to the new plant in 2018. Phase II construction will start upon shareholders’ approval based on the operational condition of the company.

Registration and construction investment of phase I totaled ¥447.32 million with King Long and Higer Bus investing ¥40 million and ¥80 million respectively.

King Long will own production hubs in both Fujian Province and Northwest China in the future, which are also the starting points of the Silk Road at sea and land. The two hubs will contribute to King Long’s export strategy and perfect its productivity layout, said the company.

King Long estimates a production capacity of 30,000 buses with ¥10 billion sales revenue annually, nearly half of the company’s current annual operating revenue.

King Long expects a booming output and sales of new energy buses thanks to the government preferential policies including the subsidy reduction of diesel engine public transport buses from 2015 to 2019 and the ¥20,000-¥80,000 operational subsidy to new energy buses. The company estimates NEV sales exceeding 2,400 units in the first four months with total sales in 2015 far surpassing the original 6,000-unit sales target.

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