Navistar, Caterpillar to Build Trucks in China ... Are School Buses Far Behind?

The wires are rife with articles on an agreement reached between Navistar, Caterpillar and the Anhui Jianghuai Automobile Company to begin production next month on medium- and heavy-duty vehicles in China.

Caterpillar announced last year in a separate cooperative agreement with Navistar that it was leaving the U.S. domestic truck engine market, and in the process foregoing its own solution to the 2010 EPA emissions requirements. Instead, Cat is focusing on the construction vehicle market, and this week's agreement with Anhui Jianghuai will make it the largest construction vehicle manufacturer in that growing market.

Meanwhile, the deal with Anhui Jianghuai signals that Navistar is continuing to make inroads the global vehicle and in China, where total vehicle sales have surpassed thos in the U.S. during the first seven months of the year. Writes the Financial Times:

In the first seven months of this year, total vehicle sales rose 23 per cent in China to 7.2m, while it dropped 32 per cent to 5.8m during the same period in the US.

The venture is expected to be set up next month and focus on the production of medium and heavy duty trucks and engines.

It would utilise JAC’s existing production bases while deploying the capital and technology from its US partners. JAC said details of the joint venture would be released soon.

Navistar has also been working with Mahindra Mahindra since 2005 on manufacturing light-, medium- and heavy-duty commercial trucks and buses in India and for export markets. In 2007, Navistar also began producing its advanced diesel engines for Mahindra and Mahindra's trucks and buses in India.

While there was no immediate word on if any of the agreement may parlay into the production of school buses, as Navistar owns IC Bus, there has been an uptick of interest in recent years by Asian-based manufacturing companies in North American school transportation trade shows.