Deutz, Sany make alliance for China

As part of its wider growth strategy in China, drive systems supplier Deutz and Chinese construction and mining equipment manufacturer Sany have created a joint venture (JV) that will bring with it thousands of new, emissions standard-compliant engines
Deutz, Sany make alliance for China Deutz, Sany make alliance for China Deutz, Sany make alliance for China Deutz, Sany make alliance for China Deutz, Sany make alliance for China

Deutz and Sany are now in a joint venture agreement that will help grow their Chinese presence

Deutz said earlier this month that it was investing "a mid double digit million euro amount" into the deal, which has a production goal of about 75,000 new, China IV (off-road) and China 6 (on-road) emissions standard-compliant engines by 2022. It will take over production of Sany's engine range in order to meet the target.

In return for its spend, it will hold a 51% majority share interest in the JV.

"In addition to the successful conclusion of the joint venture deal with SANY, other elements of the international growth strategy are also going to plan in China," Deutz officials confirmed. This includes a strategic alliance with Beinei for local production of about 20,000 engines bound for the Asian market in 2022 manufactured at a new factory in Tianjin.

The planned ramp-up will be seen in 2020, when around 2,000 to 3,000 engines are to be produced.

Deutz CEO Frank Hiller said the JV is an important milestone for the group and its growth.

"We are now ideally positioned to take advantage of the rapid growth in the world's largest individual market for engines. 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," he said.

"We can also tap into an extensive service network that we will systematically enhance with digital solutions."

Deutz noted that the plan could not come at a better time. According to Deutz market estimates, there is a forecasted growth of up to 5% in China's construction equipment application segment this year and material handling is expected to rise 10%.