JAC Partners with NC2, Navistar

Anhui Jianghuai Automobile Co., Ltd. (JAC ) (600418.SS) announced on 16 September partnerships with NC2 Global and Navistar International Corporation that will develop, build, and market heavy duty trucks and diesel engines in China.

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Two operating agreements were signed. According to the one with NC2, a joint venture of Navistar and Caterpillar Inc., a new company called "Anhui Jianghuai NC2 Heavy Duty Truck Co., Ltd." will be formed to make heavy duty truck vehicles and parts. Equally owned by the two sides, it will have a registered capital of 1.2 billion yuan, and make 3 billion yuan investment. Projected annual capacity is 80,000 vehicles a year.

The deal reached with Navistar will establish Anhui Jianghuai Navistar Diesel Engine Co.,Ltd, which aims to build 250,000 units of diesel engines a year. Equally owned by JAC and Navistar, the joint venture will have a registered capital of 600 million yuan, and make 1.8 billion yuan investment.

The two new companies, both to be based in Hefei, Anhui, the hometown of JAC, will mainly roll out JAC brand products, especially in the first few years, although Navistar Maxxforce engines will also be built.

Last year, Chinese sales of medium- and heavy-duty trucks reached 0.894 million units, while JAC sold only a little more than 20,000 units. The two deals could help JAC catch up with bigger players in the field such as FAW, Dongfeng, Sinotruk, Foton, and Shaanxi Auto.