Deutz AG and AB Volvo have cancelled plans to enter into a joint venture in China.
The companies took the decision to call off the proposed JV, DEUTZ Engine (China) Co Ltd (DEC), in response to the country’s weak domestic market.
The US-headquartered engine manufacturer plans to continue using local production facilities to meet demand in China, claiming that it still has confidence in the country’s long-term prospects.
“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 DEUTZ Dalian Engine Co Ltd (DDE) joint venture,” commented Dr Helmut Leube, chairman of the firm’s board of management.
DDE, a partnership between Deutz and First Automotive Works (FAW) Group, is a joint venture that has been running since 2007, and produces three-to-eight-litre diesel engines for the Chinese market.
The decision to cancel DEC, meanwhile, was taken following a strategic reassessment conducted by Deutz and Volvo. The would-be partners stated that after conducting a comprehensive review, they agreed that the production company should be wound up.
Deutz and Volvo also pointed out that DEC had not made any substantial investments.
