Scania's China manufacturing base officially unveiled: in addition to truck production, it will also invest in the establishment of a research and development department
Swedish truck maker Scania has acquired a Chinese truck maker in a bid to localize its products in the world's largest auto market. Scania is a heavy-duty truck brand under the Traton Group, a commercial vehicle subsidiary of the German Volkswagen Group.
Official documents show that the Chinese company acquired by Scania is Nantong Gaokai Automobile Manufacturing Co., Ltd., which is located in the eastern Chinese city of Rugao. The acquisition gives Scania the qualification to manufacture trucks in China. The move comes after Scania said it "will invest in a Swedish battery assembly plant to explore future technologies".
Scania China Group officially inaugurated its newly acquired Rugao manufacturing base last Saturday (November 28).
Currently, China is rapidly implementing a more open and market-based economic system, which has prompted Scania to decide to invest in the Chinese market. In June of this year, the National Development and Reform Commission and the Ministry of Commerce released the "Special Administrative Measures for Foreign Investment Access (Negative List) (2020 Edition)" to loosen restrictions on foreign shareholding in commercial vehicle manufacturing.
In mid-November this year, Nantong Jiahe Technology Investment and Development Co., Ltd., the controlling shareholder of Nantong Gaokai Automobile Manufacturing Co., Ltd., completed the delivery with Scania. Nantong Jiahe Technology Investment and Development Co., Ltd. is 100% owned by the Management Committee of Rugao Economic and Technological Development Zone.
According to the data of Tianyancha App, Nantong Gaokai Automobile Manufacturing Co., Ltd. completed the name change on November 25, and the new name of the company after the change is "Scania Manufacturing (China) Co., Ltd.". Before Nantong Gao opened, the predecessor of this company was Jiangxi Yingtian Automobile Manufacturing Co., Ltd.
Scania Manufacturing (China) Co., Ltd. has a registered capital of RMB 2 billion and is 100% owned by Scania CV Aktiebolag, a Swedish commercial vehicle manufacturing company. Its business scope includes auto parts, lithium battery research and development, production and sales, sales of coal, copper, electronic products, mechanical equipment, hardware electromechanical, electromechanical equipment, automotive and auto parts technical consultation, technical services, electric vehicle charging Facility and fuel cell vehicle hydrogenation infrastructure design, construction, consulting and operation services, self-operated and agency import and export business of various commodities and technologies. Licensed items and general items include the production of road motor vehicles, the sales of new automobiles, non-residential real estate leasing, machinery and equipment leasing, special equipment leasing and transportation equipment leasing services.
Scania refused to disclose the time required to complete the preparation of production materials, nor did it disclose information such as design capacity and planned production models. But the first products are expected to be in mass production from the first half of 2022, the sources said.
China is currently the world's largest commercial vehicle market, accounting for 40% of global sales. From January to October this year, the overall sales of trucks in China rose sharply by 24% to 3.87 million units. Heavy government investment in infrastructure and model upgrades by commercial vehicle user companies to comply with stricter emissions regulations are believed to have contributed to the growth.
The Chinese government is drafting new regulations for commercial vehicles in an effort to make trucks cleaner, smarter and safer.
Currently, China's heavy-duty truck market is dominated by local automakers such as FAW Jiefang Group Co., Ltd., Dongfeng Motor Group Co., Ltd. and China National Heavy Duty Truck Hong Kong Co., Ltd., which can offer products that are more competitive in price.
Scania's models on sale in China are all imported models, and the prices are significantly higher than those of Chinese competitors. After localized manufacturing in China, the price of Scania trucks is expected to be greatly reduced, so as to compete with Chinese truck brands in terms of product quality.
"Increasing our presence in the Chinese market is crucial for Scania and for the global growth of the TRATON Group," said Henrik Henriksson, President and CEO of Scania.
He said that Scania's business in China will gradually expand and develop into a complete branch under Scania's global production and supplier system. The goal is not only to make China Scania's third-largest production base in the world, but also to develop it into a regional hub for selling trucks to other Asian markets.
"Our expansion in China will proceed steadily with the positive development of market conditions in China and the rising demand for modern, more technical trucks in the local market," said Henrik Henriksson, President and CEO of Scania. In the late 2020s, we will be investing heavily in order to benefit from this development."
Scania's future investment in China also includes the establishment of a local R&D department. The manufacturer said the move would strengthen Scania's leadership in sustainable mobility and its international competitiveness. Scania has accumulated a lot of expertise and experience in the field of power electrification and autonomous driving technology.
Although the Chinese truck market is currently dominated by local manufacturers, the demand for more efficient logistics and sustainable transportation, as well as for modern vehicles with higher technology content, better performance and higher availability, is growing. Scania's full range of internal combustion engine technology products for renewable biofuels, as well as electric products, are considered very suitable for the Chinese market.
Henriksson said Scania aims to have sales in China at least equal to its current single largest market, Brazil, by the end of the 2020s.
Similar to Scania, multinational truck manufacturers including MAN Group and Volvo Trucks have entered into partnerships with Chinese companies to accelerate their development in the Chinese market. According to previous reports from overseas media, Daimler Group is considering producing Mercedes-Benz brand trucks through its joint venture in China, Beiqi Foton Motor.