Deutz and Volvo cancel Chinese venture

Deutz and Volvo have said they will not go ahead with a previously announced engine joint venture in China. The two companies said in April 2012 that they would set up a majority Deutz-owned factory to make medium duty engines for off-highway applications in China. However, the weak local market has prompted the reversal of that decision.

Deutz highlighted in its third quarter results announcement in November that the project was under review by both partners. In announcing the cancelation of the venture, Deutz said in a statement, “Having completed a thorough and comprehensive review, they (Volvo and Deutz) have now agreed that this production company should be wound up given the weak prevailing market situation in China. The joint venture has not yet made any substantial investments.”

However, Deutz went on to say that it believed in the Chinese market’s long-term potential. Company chairman Dr Helmut Leube said, "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."

DDE is a joint venture set up in 2007 between Deutz and Chinese on-road vehicle maker First Automotive Works (FAW) Group.