China National Heavy Duty Trucks Hand MAN "Market for Technology" Now Again

The German MAN, the world's third-largest heavy-duty truck manufacturer, who has always been uncertain about investing in the Chinese market, finally made a choice last week.

MAN bought China National Heavy Duty Truck, the largest domestic sales company, at a price of 560 million euros . In the end, MAN obtained a 25% plus one share in China National Heavy Duty Truck and agreed to use TGA complete vehicle and three engines and related parts and components technology that meet Euro III, Euro IV and Euro V emission standards as exclusive licenses in China. Granted to China National Heavy Duty Truck. To this end, China National Heavy Duty Truck will pay 85 million euros in technology licensing fees.

Before and China National Heavy Duty Truck signed a strategic cooperation agreement, MAN and also other domestic commercial vehicle manufacturers have cooperated negotiations, but always insisted on using MAN MAN brand, eventually led to nothing came of the negotiations.

Previously, MAN and Chinese commercial vehicle companies had been insisting on establishing factories in China during negotiations. In addition, MAN also made concessions in other areas. It is reported that the two sides negotiated for two years, and at the beginning MAN's equity requirements are higher than the current 25%.

However, the final result is that MAN is second only to quickly entering the Chinese market: not only does it ease the use of the brand, it also reduces the equity requirement.

The temptation of MAN in the Chinese market can be imagined. In the first quarter of 2009, MAN's net profit decreased by 43.8% year-on-year; and in the first quarter of 2009, the sales of commercial vehicles in the European automobile market fell by 35.6% year-on-year.

In contrast, although China's commercial vehicle market has also experienced a decline under the influence of the economic environment, the Chinese heavy truck market has become the global sales champion for six consecutive months. Dong Yang, Secretary General of the China Association of Automobile Manufacturers, also stated at the Changchun Motor Show that he is holding that the commercial vehicle market has achieved positive growth year-on-year from January to June this year, and that the chain has now grown positively, indicating that the economic situation is improving.

Earlier this year, Mercedes-Benz and Foton Motor signed a commercial vehicle cooperation agreement. The two parties jointly established a joint venture to produce light and heavy trucks. Cummins and Iveco also have their own partners in the Chinese market. Although MAN has established a cooperative relationship with Jinhua and Yutong in the Chinese market, there is no fixed partner for heavy trucks.

Although MAN and Sinotruk are optimistic about the prospect of this cooperation, the fact that there are no successful heavy truck joint venture cases in China still warrants vigilance.

The Dongfeng and Renault heavy trucks that started brewing and cooperation in 2003 did not end in 2005. In 2004, the joint venture between Sinotruk and VOLVO ended in a brief marriage by tearing the skin. Then the cooperation between Dongfeng and VOLVO heavy trucks in 2006 was also delayed. Unable to start; the cooperation between Mercedes-Benz and Foton signed this year has also been slow.

Although the cooperation between China National Heavy Duty Truck and MAN is necessary for both parties, the bright future of Sinotruk's “market-for-technology” is still uncertain.

Zhang Xin, an analyst at Guotai Junan Securities Research Institute, told reporters that the cooperation between the two parties still needs to wait for approval. The final result is still uncertain. “MAN has two partners in China, so there are some uncertainties as to whether or not approval can be passed, so the content of the current agreement between the two parties is also quite vague.”

Moreover, some people in the industry believe that the cooperation between Sinotruk and MAN should avoid the same mistakes as the VOLVO cooperation. This is also a test for both parties. Sinotruk and VOLVO had established a joint venture company in Jinwu Huawo as early as 2003 with 50:50. However, because the product price is too high, sales are far from the expected cooperation, Hua Wo existed in name only, China National Heavy Duty Truck's absorption of VOLVO technology will naturally be abandoned.

He told reporters that although China's high-end heavy truck market is still moving forward, China's heavy truck users are still very sensitive to product prices. “These foreign-funded heavy-duty companies used to directly introduce products into China. Even if they have advanced technology and good quality, sales are very low due to high prices.”

In fact, the self-owned brands have achieved almost monopolistic market share in the heavy-duty truck market. Companies such as CNHTC, Dongfeng Tianlong, FAW Jiefang, Foton Heavy Truck, and Shaanxi Auto Heavy Duty Truck accounted for almost 90% of domestic heavy truck sales. Including VOLVO, Mercedes-Benz, Renault, MAN and other imported brands, the annual sales of less than 3,000 vehicles, almost negligible.

Under this situation, Sinotruk's joint venture demand for MAN directly refers to MAN's engine advanced technology, just as many years ago, Sinotruk and VOLVO's joint venture, now, China's heavy truck and VOLVO's "behind the matter" is still bad The end is in Jinan, but today's joint venture partners have replaced MAN, what will be the outcome?

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