In Diaoyutai State Guesthouse in Beijing, Cummins Corporation and Beiqi Foton Motor Co., Ltd. signed a formal joint venture agreement. According to the agreement, Cummins and Foton Motor will establish a light-duty diesel engine company, Beijing Foton Cummins Engine Co., Ltd. at a 50:50 equivalent ratio to produce Cummins' new generation 2.8-litre and 3.8-litre light-duty diesel engines.
It is understood that Beijing Futian Cummins Engine Co., Ltd. has a total investment of nearly 2.5 billion yuan and a registered capital of 1 billion yuan. It will be put into production in 2008 and is expected to have an annual production capacity of 400,000 units. The part of the products produced by the joint venture company will be used for the vehicles of Foton Motors and its subsidiary brands, and the rest will be sold domestically through Cummins' sales network and be exported.
Foton Motors is currently the largest manufacturer of light commercial vehicles in China, and Cummins is the world’s largest independent engine manufacturing company. People in the industry believe that the strong alliance between the two parties will not only achieve a win-win result, but will also promote technological progress in the entire industry.
Foton Motor: Ensure 20-year pilot light truck power market
Foton Motor has been producing and selling light trucks since 1999, and has maintained its position as the No. 1 light truck industry for 8 years in a row, and has occupied more than 30% of the domestic light truck market.
According to expert analysis, in the next 3 to 5 years, the light-card consumer market will be tilted toward energy-saving and environmentally friendly vehicles, and the high-end light truck market will usher in high-speed growth and new competition peaks. In order to comply with this situation, as a leading player in the domestic light truck industry, Foton Motor has accelerated the pace of upgrading light truck products. The strategic cooperation with Cummins, the world's largest independent engine supplier, will strengthen the market competitiveness of Foton Motor in the high-end light truck industry.
“The Cummins engine with international leading level will provide a stronger heart for Foton light trucks. This will further help improve the quality, brand and image of Foton auto products. In addition, Cummins engines that can meet Euro IV emission standards can be achieved. This will undoubtedly enhance the international competitiveness of Foton light trucks and provide a strong impetus for Foton Motor to impact the European and American markets.†Zhao Jingguang, deputy secretary of the Party Committee of Foton Motor and spokesman of the press, told reporters.
According to Zhao Jingguang, Foton Motor plans to produce and sell 1 million cars by 2010, of which 300,000 will be sold overseas. Professionals believe that the joint venture between Foton Motor and Cummins is an important deployment of Foton in order to realize its global strategy; the formation and improvement of this dynamic layout will at least ensure the commercialization of Foton Motor in China and even the world in the next 20 years. Absolute advantage in car market dynamics.
Cummins: Complete the layout of China
Cao Mingde, Group Vice President of Emerging Markets and Business, said that after completion, Beijing Foton Cummins Engine Co., Ltd. will become Cummins's only light diesel engine production base outside the United States, and its production of engine products will be widely used. Light trucks, pickup trucks, SUVs, MPV utility vehicles, and small off-highway equipment.
Cao Side also said that the Beijing Futian Cummins joint venture project has made new breakthroughs compared with Cummins’ previous cooperation: First, the two models that the joint venture will soon put into production are never located anywhere in the United States including the United States. The truly new products that have been produced are high-performance light-duty diesel engines that Cummins invested heavily to develop in the 21st century, Europe and the United States and other international markets. They have a high starting point, high performance and low emissions, and can meet Euro III and Euro IV. And above emission regulations; Secondly, Foton’s leading position in the field of light vehicles prompted Cummins to locate the largest light engine project in China in Beijing, with a new investment scale.
It is understood that Cummins is the world's leading power equipment manufacturer, with sales of nearly US$10 billion in 2005. Up to now, Cummins has successively produced eight series of its 14 engine product series through its local joint ventures in China. Among them, heavy-duty vehicle engines are produced in Shaanxi Auto and medium-sized vehicle engines are produced in Dongfeng. The light-vehicle engine settled in Foton Motor finally completed the layout of Cummins in China.
"This cooperation is a key step in the development of Cummins' business in China. Cummins and Foton Motors are the first to enter the field of light commercial vehicles on a global scale and will further improve the diversified structure of Cummins products and markets. It is in favor of the long-term development strategy of Cummins Inc. It also reflects Cummins's high regard for the Chinese market and its confidence in the long-term development prospects of China's economy, said Cao Side.
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