Ford Motor Company is reentering the heavy truck market through its partner Jiangling Motors Corporation in China. JMC will buy Taiyuan Changan Heavy Truck Company, its first entry into the heavy truck business. JMC currently builds Ford Transits under license from Ford, and Ford owns 30% of the light commercial vehicle maker.
As part of the agreement, JMC will pay cash for the 80% currently held by China Changan Automobile and the 20% holding of China South Industries Group Corporation. Upon completion of the deal, Taiyuan Heavy Truck in Shanxi Province will become a wholly-owned subsidiary of JMC. A stock market filing said the deal was worth about $42 million.
JMC sold more than 190,000 vehicles in 2011, bringing in revenue of 17.5 billion Yuan or ~$2.7 billion. China is the world’s largest heavy truck market, with more heavy trucks – 1 million – sold last year than in Europe, North America and South America combined. The light commercial market is about as large as the passenger vehicle market in China, making China by far the world’s largest vehicle market. LMC Automotive’s China forecast is 19.47 million units this year, up 8.2% from 2011.
“Ford has enormous experience and world-class products and technologies, including in the heavy truck business, which can be deployed to support JMC after the acquisition,” said Dave Schoch, chairman and CEO, Ford Motor China.
Last year Ford sold 519,000 vehicles in China, where it badly lags well-established competitors such as General Motors or Volkswagen Group, which outsell Ford by a 5:1 or 4:1 ratio, respectively.
Ford’s wholly owned subsidiaries, joint ventures and investment in China include Ford Motor (China) Limited, Ford Motor Research & Engineering (Nanjing) Co., Ltd., Ford Automotive Finance (China) Ltd., Changan Ford Mazda Automobile Co., Ltd., Changan Ford Mazda Automobile Co., Ltd. Nanjing Company, Changan Ford Mazda Engine Co., Ltd. and Jiangling Motors Co., Ltd.