Dongfeng and Volvo agree to form alliance, focused on producing Chinese commercial vehicles

Gasgoo.com (Shanghai January 28) - Dongfeng Motor and Swedish commercial vehicle maker AB Volvo have agreed to establish a strategic partnership, Securities Daily reported today. According to the agreement, which was signed in Beijing earlier this past Saturday, both sides will work together in developing Dongfeng brand commercial vehicles.

Internal sources from Dongfeng explain that although only an agreement has been signed so far, a series of new projects will begin following the Lunar New Year, including the registration of a new joint venture company. The JV will reportedly be located in Shiyan, Hubei, and will focus on R&D, production and sales of Dongfeng trucks, buses and special use commercial vehicles, as well as engine, chassis, transmission and other auto parts. The JV will take advantage of both companies' technological advancements to update platforms used for Dongfeng commercial vehicles and bring the Dongfeng brand to the forefront of the global commercial vehicle market. Specific attention will be paid to making vehicles that adhere with overseas market requirements.

Unlike most other Sino-foreign JVs, Dongfeng will possess a 55 percent majority share in the new JV, while Volvo will own the remaining 45 percent. The latter will invest 5.6 billion yuan ($891.68m) in the JV. Dongfeng, for its part, will reportedly use the assets it will be acquiring back from Nissan following the dissolution of their previous commercial vehicle JV.

According to Dongfeng Group President Zhu Fushou, the manufacturer is undertaking a global strategy in response to slow commercial vehicle growth in China. "This is not only to achieve our 2016 one million commercial vehicle sales goal, but to also improve our brand value worldwide," Mr. Zhu explained.