TAIYUAN, China — As part of its continued aggressive expansion in Asia, Ford Motor Company’s commercial vehicle investment in China will expand into the heavy truck business through a major acquisition, giving it a strong foothold in the world’s largest market for the segment.
Jiangling Motors Corporation (JMC) will buy a 100-percent stake in Taiyuan Changan Heavy Truck Company. The deal will be finalized upon approvals from relevant Chinese government authorities.
“JMC’s acquisition represents a great opportunity to continue to expand the breadth of our business in China across vehicle segments,” said Dave Schoch, chairman and CEO, Ford Motor China. “A strong heavy truck operation like Taiyuan will complement Ford’s existing passenger car and light commercial vehicle operations here in the world’s largest and fastest-growing vehicle market.”
In addition to the acquisition, to accelerate its growth in China, Ford will be introducing 15 new vehicles and 20 advanced powertrains to China by 2015. To support this growth, Ford and its partners are building five new plants in China, including a new USD300-million manufacturing facility in Nanchang where JMC is based, with an annual capacity of 300,000 units. When the facility comes online in 2013, it will produce both JMC and Ford-branded vehicles. To date, Ford has invested a total of USD4.9 billion to grow its presence in China, which will be a key engine driving Ford’s growth globally within this decade and beyond.
“Being a major shareholder of JMC, Ford is delighted to witness JMC’s rapid development and business expansion in the commercial vehicle market,” said Schoch. “Ford has enormous experience and world-class products and technologies, including in the heavy truck business, which can be deployed to support JMC after the acquisition.”
Schoch, who is also vice chairman of JMC, was among government officials and executives at a signing ceremony today in Taiyuan, the capital of Shanxi Province, to commemorate the acquisition agreement.
As part of the agreement, JMC will pay cash for the 80-percent stake currently held by China Changan Automobile and the 20-percent holding of China South Industries Group Corporation. Upon completion of the deal, Taiyuan Heavy Truck will become a wholly-owned subsidiary of JMC.
Ford holds a 30-percent stake in JMC, which currently manufactures light commercial vehicles and SUVs, including the Ford Transit which it has been producing since 1995. JMC sold more than 190,000 vehicles in 2011, bringing in revenue of 17.5 billion Yuan (approximately USD2.7 billion).
Shanxi Province provides a significant launch pad for JMC’s foray into the heavy truck business where heavy trucks are in strong demand thanks to the region’s wealth of raw materials and energy resources such as iron, coal and electricity.
“With Ford’s support, Jiangling will quickly introduce new products and improve Taiyuan’s existing products in order to bolster the competiveness of Taiyuan Heavy Truck,” said Schoch.
Demand for heavy duty trucks is expected to continue to pick up steadily given China’s long-term economic growth potential and strong investments in infrastructure by the Chinese government. China is the world’s largest market for heavy trucks, with nearly one million units sold last year – more than North America, Europe and South America combined.
From left to right, Wang Xigao, chairman, JMC, shake hands with Lian Gang, vice president, China Changan Group, and chairman, Taiyuan Changan Heavy Truck, after signing the acquisition deal in Taiyuan.
From left to right, Wang Xigao, chairman, JMC, and Lian Gang, vice president, China Changan Group, and chairman, Taiyuan Changan Heavy Truck, signing an agreement during a ceremony in Taiyuan.