Thursday 31 January 2013

Volvo seeks slice of China

Volvo Corporation has paid about £570 million (about US$1 billion) for a 45 per cent stake in Dongfeng Commercial Vehicles Company (DCVC).

Dongfeng Motor Corporation (DMC) is already the largest producer of heavy-duty trucks in China while Volvo is the world’s third largest truck maker.

The market in China for such vehicles is said to be larger than the combined markets of the USA and Europe. China is reputed to account for 50 per cent of the world truck market.

Last year, the market for trucks in China totalled 636,000 for which Dongfeng is reputed to have taken a 16 per cent share. The medium-sized truck market accounted for some 290,000 units of which Dongfeng again accounted for 16 per cent.

In 2011, Volvo Trucks made some 180,000 trucks of which some 142,000 could be accounted for by that part of the business that will be included in the new joint venture.

Volvo claims the deal will it become the world’s largest producer of heavy-duty trucks following its joint venture with Dongfeng

In 2004, DMC sold 523,000 vehicles; by 2007 the number had risen to 1,137,000. By 2010, the conclusion of the eleventh five-year plan, the number had doubled to 2,620,000 units. The year 2011, marked the beginning of the twelfth five-year plan, a critical historical period in the development of DFM which builds passenger cars, trucks and buses.

It is understood the new joint venture, Dongfeng Commercial Vehicles, will be formed after the Chinese firm buys out Nissan from their 50:50 joint venture in medium-duty trucks.

The move comes at a time when Volvo has pronounced that it sees 2013 as being a ‘tough year’.

Last June, DMC announced it would invest US$793 million in a new assembly plant in Dalian, in north-east china, to build Nissan-badged cars with production beginning 2014 with an initial annual output of 140,000 units building up to 300,000 units eventually. The same year, DMC announced it would start building Nissan’s Infinity brand vehicles.

Some years ago, reported that in May 1984, the foundry of Dongfeng Motor Corporation’s foundry began ‘assembly line mass production of vermicular graphite cast iron exhaust pipe to become China's first factory in the pipeline on the mass production of compacted graphite iron (CGI) castings. 

In the early 1990s, it successfully developed a vermicular graphite cast iron transmission housing, while the FAW Foundry Company, part of the FAW Group created an exhaust manifold assembly for Shanghai Volkswagen Santana. Volkswagen was FAW’s foreign partner. 

Meanwhile, Wuxi Diesel Engine, also part of the FAW group, in the 1980s began mass production of vermicular graphite iron cylinder heads. 

In addition, On Haishengdeman Casting Co., Ltd., part of the Shanghai Automotive Industry Group, reportedly produces silicon molybdenum vermicular graphite cast iron exhaust manifolds. The company has capacity for 5.5 million tons a year and has sales of $600 million.

Finally, last September (10-13) a symposium was held to further promote the developments of China’s CGI activities, to aid problem-sharing and more generally to direct the research and development of vermicular graphite cast iron. Among the speakers was former chief engineer Professor Wan Yan Fon of Dongfeng Motor Company’s foundry division. He discussed automotive brake hubs.