Dongfeng in talks with Volvo to make trucks

CHINESE automaker Dongfeng Motor Group Co said today it is considering selling a stake in a commercial vehicle unit to Swedish truck maker AB Volvo.

The unit is part of Dongfeng's joint venture with Japan's Nissan Motor Co. The three parties were discussing whether Volvo would replace the Japanese company as Dongfeng's partner in the medium and heavy-duty commercial vehicles arm, the Chinese automaker said in a statement, The Associated Press reported today.

Nissan would then focus on just the passenger car and light commercial vehicle unit, said Dongfeng, which is listed in Hong Kong.

Dongfeng said the companies have not entered any binding agreements that will require the approval by the relevant authorities of Beijing.

Dongfeng Motor, set up in June 2003, is owned equally by Nissan and Dongfeng. Under the joint venture, passenger cars are produced under the Nissan brand, while trucks under the Dongfeng name.

Volvo, the world's second-biggest truck maker by sales, has said it was interested in taking over Nissan's stake in Dongfeng's truck unit. Volvo Chairman Finn Johnsson said in September that any decision on a deal involving Dongfeng may take 18 months from that time.

Volvo's planned expansion in China is part of the Gothenburg-based company's plans to expand its market share in Asia. In April last year, it bought a 13 percent stake in Nissan Diesel Motor Co, Nissan's truck-making unit, with the option to increase the stake to 19 percent.

Volvo draws most of its truck sales from Europe and North America, and has a market share of just 0.7 percent in Asia, according to the company.