US, China firms team up on green truck play
Updated: 2014-04-10 11:15
By Wang Chao in Beijing (China Daily USA)
The heavy-duty truck market is usually seen as a barometer of the macro-economy, since it reflects the scale of infrastructure development. Although the Chinese truck market is slowly picking up from a downturn last year, it is still far from its level of 2010.
Instead of blaming the economy, Foton, China's largest commercial vehicle manufacturer by shipment, is trying a new way to buck the trend by focusing on new energy and lower-emissions products, in partnership with US engine-maker Cummins.
Beiqi Foton Motor Co signed an agreement with Cummins Inc earlier this week in Columbus, Indiana to jointly develop trucks and machinery under Euro-X emission standards, and to develop vehicles powered by clean energy such as liquefied natural gas.
The companies are also investing $323 million to build manufacturing bases in China and Brazil, with combined annual capacity of 60,000.
Cooperation between Foton and Cummins dates back to 2008 when they established a joint venture in Beijing to produce diesel engines. The flagship model Foton developed for mature markets like the US and Europe - the Auman GTL - is also equipped with a Cummins engine.
The "GTL" in the name stands for global technology leader and is emblematic of Foton's ambitions in the global commercial vehicle arena.
While overseas models are going high-end, Chinese customers are also trading up. Currently, most trucks operating in China are under the Euro-III emission standards. But since July 2013, the Chinese government has been promoting the Euro-IV standards and has pledged to phase out the Euro-III products in one or two years.
The policy puts a big strain on truck manufacturers and dealers. But as many companies are busy selling their Euro-III inventories, Wang Jinyu, president of Foton, said it is also an opportunity.
He used a metaphor to describe the current market: When the wind blows hard, some people build walls against the wind, others build windmills to generate electricity. "Foton and Cummins belong to the latter group," he said.
At the signing ceremony, Foton and Cummins also unveiled a new truck - the Super-Power Auman GTL - and a new engine developed for the Chinese market.
The truck is powered by Cummins' new ISG engine, which was developed exclusively for the Chinese market. Yet innovations from the engine can be adapted to Cummins' North American line, said Jerl Purcell, director of development for the engine.
"The development of the ISG is a turning point for Cummins in how it handles developing markets like India, Russia and China, as the engine was built from the ground up for the Chinese market," said Jack Roberts of Etrucker.
Industry watchers said this is not only a collaboration on products, but also a clean-energy initiative between China and the US. Citing US Secretary of State John Kerry on his visit to the Beijing engine plant, it is "really a blueprint for the businesses of the future".
In February, Kerry toured the engine plant and said: "One of the most important challenges that we all face here in China, in America, in Europe and other countries, particularly where there's a lot of industry and development, is how we improve the quality of the air that we breathe and at the same time reduce the greenhouse gas emissions that contribute to climate change.
"To be successful, it is going to take the cooperation of China and the United States - not just our governments, but also our industries," Kerry said.
Cooperation with US-based Cummins has also paved the way for GTL's expansion in the US and Europe.
"Cummins has already built more than 100 service operations overseas, which greatly facilitates our after-sales services," Wang said.
So far, Foton has established factories in Indonesia, Vietnam, Russia, Mexico, Pakistan, Turkey and Iran. More are under construction in South America and Africa, the company said.
Vice-president of Cummins Group in China & Russia Steve Chapman (left), president of Beiqi Foton Motor Co Wang Jinyu (center) and Vice-president of Beijing Foton Daimler Automotive Co Stefan Albrecht unveil the new Cummins ISG Diesel engine and the Foton Super-Power Auman GTL on Tuesday at the Cummins Technical Center in Columbus, Indiana. Provided to China Daily
(China Daily USA 04/10/2014 page1)