Cummins in Feasibility Study to Produce Light-Duty Diesels in China

March 16, 2006
Joint-venture partnership with Beiqi Foton Motor could start in 2008

Engine manufacturer Cummins Inc. recently entered into a feasibility study with China's Beiqi Foton Motor Co. regarding the formation of a 50/50 joint venture to produce two types of light-duty diesel engines for the commercial market.

The prospective company, Beijing Foton Cummins Engine Co., will be based in Beijing. The feasibility study outlines the parameters of the partnership and is the last step before Cummins and Beiqi Foton finalize the joint-venture agreement.

Engine production would start as early as 2008. The engines would be suitable for use in light-duty commercial trucks, pickup trucks, SUVs, MPVs, small construction equipment, marine, and mobile power generation.

"This agreement is a critical next step in Cummins continuing efforts to grow in the important China market," said John Watkins, Cummins v.p. and president of Cummins East Asia. "Entering the light-duty engine market with a successful partner such as Foton is consistent with our history of partnering with leading Chinese companies and with our long-term development strategy in China."

Cummins already is the leading foreign producer of heavy-duty diesel engines in China, but it has no role in the light-duty diesel market there. In 2005, manufacturers in China produce 860,000 light-duty trucks, and Cummins predicts the market will grow at an 8% rate for the foreseeable future.