Once the agreement has been approved by the Chinese central authorities, Iveco and SAIC will establish a 50-50 joint venture, under the name of SAIC Iveco Commercial Vehicle Investment Company. This company’s first act will be the acquisition of a 67% share of Chongqing Hongyan Motor, which is a subsidiary of the Chongqing Heavy Vehicle Group.
The agreement will see the construction of a new production plant located in Chongqing, with a total investment of approximately €120 million (£82.1m), of which Iveco will be responsible for €40 million (£27.4m). This is intended to support a volume increase from the current 15,000 to 40,000 heavy commercial vehicles in the medium term.
“The agreement is part of a broad plan for Iveco’s development in China,” said Paolo Monferino, Iveco’s chief executive officer.
“Iveco considers China as a priority, not only because of its market’s size, growth rate and the cost of manufacturing, but because local engineering knowledge is outstanding and there is significant potential for global product planning. The partnership with SAIC is an important milestone in our strategy,” he said.