China's FAW eyes Volvo truck engine unit

Shanghai, August 20 (Gasgoo.com) First Automotive Works (FAW) is now holding preliminary talks with Volvo Group's engine unit on a possible acquisition, Chinese newspaper Beijing Times reports Thursday, quoting people familiar with the case.

The informed people said a group of representatives of FAW have already gone to visit Volvo Penta, an affiliate of Volvo Group, in Sweden and would negotiate about purchasing Volvo's truck engine business.

Gao Yuan, FAW Group's spokesman, and Jiang Lan, vice-president of Volvo (China) Investment Co, both denied any knowledge of the deal.

FAW already had some business contacts with Volvo in its history. It currently has a technical tie-up with Volvo through its diesel engine plant in Wuxi, Jiangsu province.

FAW also signed contract with China National Heavy Truck Corp. and Volvo in 2004 to build a $200 million plant to produce 50,000 engines a year by 2010, though that deal was scrapped two years later.

Volvo Penta is a world-leading supplier of engines and complete power systems for marine and industrial applications. It has wholly owned assembling factory in Sweden, the US, and a final assembling factory in Wuxi.