Cummins and Dongfeng Form JV To Sell Engines To Dongfeng - Get It?

SHANGHAI, April 18, 2003; Reuters reports that Chinese automaker Dongfeng Automobile Co Ltd and U.S.-based diesel engine maker Cummins Inc have set up a $100.6 million venture to make diesel motor engines, state newspapers said on Friday.

Dongfeng would own a 50 percent stake in the venture, which would have the capacity to produce 130,000 diesel engines a year, with Cummins and its domestic subsidiary holding the other half, the Shanghai Securities News said.

The venture in the central province of Hubei, which merges two existing plants that already make Cummins' engines, was first announced at the end of February.

Based in Xiangfan, it will be China's largest and most advanced diesel engine factory, the newspaper added, without saying which type of vehicles the engines would power.

Dongfeng Automobile, a unit of China's third-largest vehicle maker, sold about 114,000 diesel engines in 2002. Net profit rose 15 percent year on year to 616 million yuan ($74.4 million).

Dongfeng also said on Friday it would invest 195.75 million yuan to produce a new line of light trucks. It sold 63,700 light trucks last year, an increase of 126 percent from 2001.

Parent Dongfeng Motor Corp has two Chinese car making ventures, one with France's PSA Peugeot Citroen and another with Japan-based Nissan Motor Co Ltd (Tokyo:7201.T - News).