Deutz, Volvo put brakes on Chinese joint venture

Bleak market conditions prompt German engine firm and Sweden’s AB Volvo to call off agreement

PHOTO: Helmut Leube of Deutz said the company remains optimistic about the Chinese market. Credit: Supplied

Deutz and Sweden’s AB Volvo have called off their planned joint venture in China due to weak market conditions in the country, the German engine manufacturer said.

Deutz said in a statement that both companies had agreed that the joint venture, Deutz Engine China Co. Ltd, should not proceed. The venture had been expected to be set up at the end of the year.

“Having completed a thorough and comprehensive review, [the companies] have now agreed that this production company should be wound up given the weak prevailing market situation in China. The joint venture has not yet made any substantial investments,” the German firm said in a statement.

Faced with sluggish growth last year, Deutz reported in November that the volume for new orders in the first three quarters of 2014 had shrunk 10.5% from the same period in 2013.

The company, however, remains optimistic at the Chinese market’s long-term potential.

“It remains our stated objective to use Chinese production facilities in order to meet local demand from AB Volvo and other target customers and, to this end, we will be focusing on our Detz Dalian Engine Co., Ltd. (DDE) joint venture,” said Dr Helmut Leube, chairman of the Board of Management of Deutz AG.


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