VOLVO TRUCK Corp. and China National Heavy Truck Corp. hope to finalize their efforts for a joint venture by summer.
The venture involves joint development, production, distribution and management of commercial vehicles over 10 tonnes GVW. The Chinese government has approved the venture with China's largest truckmaker.
'Negotiations for the proposed venture started in 1994,' said Stefan Lorentzen, spokesman for Volvo AB, the Swedish holding company of Volvo Truck. He would not name rival truck manufacturers who were negotiating with China National Heavy Truck.
'But in the early stages of negotiations, I believe almost every truck maker was involved,' said Lorentzen.
Volvo Truck and China Heavy Truck will be equal partners, with Volvo Truck having management control. Financial details were not disclosed.
Volvo's is the first large-scale joint venture for heavy trucks in China. It will be located in Jinan in Shangdong province.
Although the government has approved the venture, said Lorentzen, 'there are still a few steps to be taken before we can be operational.'
The companies plan capacity for 20,000 trucks annually, including 5,000 from Volvo's European heavy-duty FL range and 15,000 versions of current Chinese models updated with Volvo cabs and engines.
China's heavy truck market is 30,000-35,000 units annually. China National Heavy Truck Corp. made 14,000 trucks last year. Volvo sold only 150-200 trucks in China.
Volvo believes the market can be much larger. The company has been active in China since 1993 in a venture with Xian Motor Corp. that produces buses.
'This venture strengthens our efforts to become a global player in heavy truck production,' said Lorentzen. 'We are already strong in Europe, both Americas and are beginning to be so in Asia.'
Volvo Truck Corp. opened a truck plant in Pakistan last year and will open one this year in India.
With an annual output of 70,000 units, Volvo is one of the world's largest heavy truck manufacturers.