Caterpillar, Navistar eye China truck JV

• Source: Ce.cn
• [08:36 August 25 2009]
• Comments

Caterpillar Inc and Navistar International Corp are in talks with Anhui Jianghuai Automobile Co to set up a truck venture in the country, a source familiar with the matter said last Friday.

"The parties have basically agreed on the framework for a 50-50 venture to make heavy trucks and engines, but have yet to iron out the details," the source said.

A Jianghuai spokesman declined to comment, while Caterpillar and Navistar executives could not be reached.

Analysts said the JV, to be hopefully concluded before the end of the year, will give the US industrial giants a chance to tap the potential of China's heavy truck segment, which is getting a lift from Beijing's economic stimulus package.

Unlike General Motors and Volkswagen, which have long become household names in China, foreign truck giants have made little headway over the years as their upscale models are too expensive for local trucking service operators.

"Foreign truck makers face a much bigger challenge in China comparatively because an Audi is a status symbol, while a Volvo truck can only push up trucking firms operating cost," said Chen Qiaoning, an industry analyst with ABN AMRO TEDA Fund Management.

The availability of locally made trucks, priced at one-third or less than imported models and considered more suitable for bumpy roads in land-locked inland China, were also cited as major hurdles.