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Scania in Chinese Market Drive With Plans for New Production Hub -- Update

11/24/2020 | 09:49am

By Dominic Chopping

STOCKHOLM--Swedish truck maker Scania said Tuesday that it is growing its footprint in China by establishing a wholly-owned truck production facility.

Scania, owned by Volkswagen AG subsidiary Traton SE, said it has decided to expand in China to benefit from the country's status as the world's largest market for commercial vehicles, which currently accounts for 40% of global sales.

The Chinese market is dominated by national manufacturers, but a move by the country to increase competition by opening up for foreign-owned companies has prompted Scania's decision to invest in the country, it added.

"Our expansion in China will be made step by step and in pace with the positive development of market conditions and the increasing demand for modern vehicles with a higher technology content that will follow," Scania Chief Executive Henrik Henriksson said.

"Until the end of the 2020s, we will make significant investments in order to benefit from this development as well as to establish China as the third leg in our global production structure."

The company's production hubs are currently based in Europe and Latin America, with a site also in Thailand.

Scania said the establishment of its own industrial operations in China has been made possible through its acquisition of Nantong Gaokai Auto Manufacturing Ltd. and it is aiming for sales in China at the end of the 2020s of at least the same volume as that of its current single largest market, Brazil.

"Increasing the presence in the Chinese market is crucial for Scania and the Traton Group's global growth. Our operations in the country will gradually be expanded and developed into a full-scale unit in Scania's global production and supplier structure," Mr. Henriksson added.

The new facility is in Rugao, 150 km northwest of Shanghai, and will start production in early 2022.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

11-24-20 0948ET

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