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Sino-US diesel engine JV ready to gear up

(China Daily)
Updated: 2009-07-06 11:31

Diesel engine manufacturing has slowed in other parts of the world but has speeded up in China, thanks to a joint Sino-American venture.

Salesman explains auto engine to customers. Diesel engine manufacturing has speeded up in China. Asianewsphoto

Manufacturing of diesel engines began in June at facilities operated by US-based Cummins Inc. and Beijing-based Beiqi Foton Motor Co, Ltd as part of a 50/50 joint venture called Beijing Foton Cummins Engine Company Limited, or BFCEC.

BFCEC is expected to manufacture more than 400,000 engines a year to be used primarily in Beiqi Foton's light-duty commercial trucks, as well as for other vehicles and construction and industrial equipment.

The partnership between the 90-year-old US company, the world's largest independent engine maker, and a 13-year-old Chinese industry is expected to boost business for both.

BFCEC, a partnership formed in March 2008, is the largest overseas engine project of Cummins Inc with a total investment of 2.7 billion yuan.

Salesman explains auto engine to customers. Diesel engine manufacturing has speeded up in China. Asianewsphoto

BFCEC plans an annual production capacity of 200,000 per year for its current Foton Ollin line, and an additional annual production capacity of 300,000 for its planned direct-injection gasoline engine line.

Cummins executives said confidence in the China market inspired the partnership.

In 2008, global sales for Cummins totaled $14.34 billion, including $2.3 billion in sales to China -- up 33 percent from 2007, the company reported.

"China is one of the most important markets, besides the North American market, and also the fastest-developing market," said Wang Hongjie, vice president of Cummins (China) Investment Company Ltd.

Wang said that despite what he called "this short-term economic challenge," China remains of "core importance" to the American company's development strategies.

"The launch of Foton Cummins reflected Cummins' long-term confidence and promise in the Chinese market," Wang said.

Beiqi Foton executives said the joint venture already is receiving orders for engines.

"The launch into production for this project means one of the largest joint venture diesel engine projects also has generated a powerful new competitive force," said Wang Ning, general manager for Beiqi Foton.

Beiqi Foton is China's largest commercial vehicle manufacturer, maintaining its top domestic market position for the past 11 years.

China's overall vehicle sales volumes exceeded 1 million during each of the past three years (through May 2009), making China the world's largest automotive sales market.

However, China'a automotive export industry lags behind other countries.

Zhang Xiyong, executive deputy general manager for Foton Motor Group, said automakers who want to expand foreign markets are focusing on more advanced engines.

"To create a more energy-saving and environmentally friendly engine is the most pressing task for China's auto makers that want to grow internationally," Zhang said.

"The top-notch 2.8-liter and 3.8-liter light-duty diesel engines made by Foton Cummins will make it possible to exceed current environmental requirements These engines will help Foton to move into new international markets," Zhang said.

Beiqi Foton estimates that its vehicle sales will reach 800,000 to 1 million units a year by 2010, with 20 percent of those future sales expected to come from overseas markets.

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