Deutz is taking over Sany’s engine manufacturing business, with the formation of a Joint Venture in which it will hold a 51 percent stake. It has also agreed two other strategic alliances in China.
Deutz will invest what it describes as “a mid double digit million euro amount” in the Joint Venture, while Sany will put in its engine production business, with the deal expected to close by the end of the year. Sany expects to take around 75,000 new engines a year by 2022, with all engines complying with China IV emissions standards for off-road applications and China 6 standards for on-road applications.
Alongside this deal Deutz has formed a strategic alliance with its long term Chinese licensee Beinei to produce around 20,000 new engines a year for the Asian market under the supervision of a Deutz management team by 2022, at a new factory in Tianjin. The ramp-up is due to begin next year, starting at around 2,000 to 3,000 engines.
Deutz has also formed a new partnership with Chinese sales and rental company Far East Horizon to expand its local service business, benefiting from its 80 branches.
Deutz chief executive Frank Hiller said: “The joint venture agreement marks an important milestone in the implementation of our new China strategy. The alliances with our local partners will enable us to significantly increase our local presence for engines and we now have access to an attractive production network that will enable us to efficiently meet customer demand in the region. We can also tap into an extensive service network that we will systematically enhance with digital solutions. In an initial stage, we aim to achieve revenue of around €500 million by 2022.”