Caterpillar, Navistar JV In Talks With Chinese Company
September 30,2009
(chinatrucks.com, September 30, 2009)Caterpillar Inc. (CAT) and Navistar International Corp. (NAV) are aiming build and sell commercial trucks in China under a partnership with a Chinese auto maker.
NC2 Global LLC, which is owned by Caterpillar and Navistar, said Monday that talks are under way with Anhui Jianghuai Automobile Co. Ltd. (600418.SH), or JAC, to establish a jointly owned operation for medium and heavy-duty trucks. NC2, which is based in Illinois, is looking to leverage its owners' truck and engine know-how and distribution capabilities through JAC's brands and manufacturing plants in China.
JAC sold about 10,000 medium and heavy-duty trucks in 2008, along with 100,000 light-duty trucks and some 45,000 sport utility vehicles and cars.
For Navistar, the venture with JAC would provide a route into the Chinese domestic truck market, where Navistar has almost no presence currently. For Caterpillar, the venture would be an opportunity to expand its existing manufacturing and distribution network in China for engines and construction machinery. Caterpillar will stop making engines for the North American truck market at the end of this year, but is interested in increasing truck engine sales in overseas markets.
NC2 and JAC are expected to complete an agreement for the joint venture by the middle of 2010. JAC is partially owned by the Chinese government.
Caterpillar and Navistar recently agreed to provide NC2 with up to $264 million in the coming years to cover the company's startup expenses.
Caterpillar's stock closed Monday up 1.9%, at $52.18 a share, while Navistar finished down 1.4%, at $38.27 a share.
Source : Wall Street
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