China Yuchai forms strategic cooperation with Kim Long Motor

China Yuchai forms strategic cooperation with Kim Long Motor

China Yuchai International Limited (NYSE: CYD) through its main operating subsidiary in China, Guangxi Yuchai Machinery Company Limited (Yuchai), announced on February 20 that Yuchai had entered into a comprehensive strategic cooperation agreement with Kim Long Motor Hue, a subsidiary of Vietnam's FUTA Group.

The scope of the strategic cooperation consists of the grant and provision of technology licences, component supply and related support, and services for the construction of an engine factory at Kim Long Motor's site in Vietnam.

Yuchai has granted Kim Long Motor the technology licensing rights for certain engine series. These engine models will be manufactured primarily for trucks, buses, and other commercial vehicles in Vietnam. Kim Long Motor will have exclusive sales rights for the licensed engines in the Vietnamese market, along with priority sales rights in other ASEAN countries and South Korea.

Additionally, Kim Long Motor has after market service rights in these countries. These licences are valid for 15 years, with total licensing fees of $28 million.

Yuchai will support the construction of the engine factory in Vietnam by providing technical services for equipment installation and commissioning at Kim Long Motor's expense. Yuchai will also supply all engine assembly parts and service kits for these engines manufactured by Kim Long Motor in Vietnam.

Weng Ming Hoh, president of China Yuchai, commented, "This cooperation agreement is an important project to further penetrate the important ASEAN-Korean trade areas, and supports our global growth."

In August 2024, Yuchai and Kim Long Motor started construction of a motor engine manufacturing and assembly plant in the central province of Thua Thien-Hue with an investment of around $260 million. The first phase of the project is slated to be operational by the second quarter of 2025.

Chinese carmakers are flocking to the Vietnamese market to build their manufacturing bases. Last September, Geely Auto Group signed a joint venture agreement with Tasco JSC for the manufacturing and assembly of automobiles in Vietnam.

The two sides will build a manufacturing facility with an estimated capital of $168 million and an annual production capacity of 75,000 units. The plant is expected to break ground in the first half of 2025, with the first vehicles delivered to customers in early 2026.

Last October, Chinese EV maker Chery was granted an investment registration certificate for a joint venture with Geleximco Group in Thai Binh province. Chery and Geleximco are building a factory in Hung Phu Industrial Park in Tien Hai district, with a total estimated investment of $800 million. The factory is slated to be completed in 2026 with a capacity of up to 50,000 vehicles per year.

VIR