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Volvo, Dongfeng talks near completion
Shanghai. February 13 (Gasgoo.com) – Despite setbacks, negotiations between AB Volvo Group and Dongfeng Commercial Vehicle Company have entered the final stage. The two sides will create a 50-50 joint venture in China to produce Volvo and other brands heavy duty trucks.
An unnamed executive from Volvo (China) Investment Co. denied an earlier report that "Volvo could have to wait years before it could start production of heavy trucks in China with Dongfeng", saying that the negotiation is making progress as scheduled.
According to a memorandum of understanding that Volvo AB and Dongfeng Motor signed in early 2007, the two sides will sign an official joint venture agreement in 2008.
Dongfeng has reserved a plant site near its headquarter in Wuhan city, Hubei province. But the joint venture will operate in both Wuhan and Shiyan, a city that is home to Dongfeng’s commercial vehicle production facilities, according sources familiar with the joint venture project.
The joint venture plant, with a designed capacity of 200,000, is expected to produce both Dongfeng and Volvo brands trucks, as well as engines for Renault heavy duty trucks, according to the MOU.
Volvo-brand heavy trucks will be its high-end products produced by the joint venture while Dongfeng-brand will take the middle or lower-end segment. Volvo trucks produced by the joint venture will be sold through Dongfeng's existing distribution network.
Volvo Group sells Volvo, Renault, Mack and Nissan Diesel brands. The company sold around 6,000 trucks in Chinese market over past years, while Dongfeng sold a total of 188,000 commercial vehicles in China last year.
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