Volvo to sell stake in Chinese truck joint venture

Volvo, the world's second-biggest truck maker, said on Monday it was pulling out of a stalled venture with the China National Heavy Duty Truck group, selling its stake in Jinan Huawo Truck Corporation and clearing the way for a Volvo tie-up with another Chinese group.

Volvo said it had signed a deal with Sinotruk and its parent China National Heavy Duty Truck, under which they would buy its 50 percent stake in Jinan Huawo.

"The Joint Venture has for various reasons not become the business success that both parties had expected," Volvo said in a statement. It did not disclose the financial details of the deal, which is subject to approval by Chinese authorities.

"This is worth extremely little," Erik Penser analyst Kenneth Toll Johansson said. "It is a collaboration that went bad and it will hardly be noticeable in Volvo's large business."

The Swedish truckmaker's venture with China National never gained much traction, producing little more than 1,000 vehicles since it was established in 2003, in part due to new legislation in China hitting demand for its vehicles.

Since then Volvo has moved closer to a possible tie-up with another Chinese vehicles maker, Dongfeng Motor Group Co.

Volvo announced in February 2007 that it would take over Nissan Diesel Motor for $1.1 billion to strengthen its Asia operations and pave the way for expansion in the China market through another route than its China National venture.

Dongfeng said in 2007 that talks with Volvo could lead to an investment by the Swedish company in that venture, whose operations include the manufacture of heavy- and medium-duty commercial vehicles.