Xu Xuegui, chief analyst of Guosen Securities' Automotive Industry, points out that in the commercial vehicle sector, there have been very few successful joint ventures. For example, the collaboration between Yutong and German manufacturer MAN on chassis development did not go well. Similarly, the joint venture between Mercedes-Benz and Yangzhou Yaxing Bus Factory ultimately failed, and the partnership between Isuzu and Guangzhou Automobile also came to a halt. Even the long-anticipated joint venture between the Volvo Group and CNHTC, which had shown early promise in the Chinese market, ended up being unsuccessful.
According to Xu, foreign companies have learned valuable but painful lessons from these failures. She considers the Volvo-CNHTC joint venture as a loss for Volvo, as it didn’t deliver the expected market share or strategic benefits. Instead, it provided tools and resources to CNHTC without significant returns. The main issue, she says, is that foreign truck manufacturers are often dissatisfied with China's pricing model. Chinese consumers prefer low-cost products, while foreign firms tend to set higher prices, leading to misalignment in the market.
She explains that in past joint ventures, both sides had different priorities: foreign companies were eager for market access, while Chinese partners focused on acquiring technology. This mismatch often led to challenges in cooperation and sustainability.
However, past failures don't necessarily mean future partnerships will fail. Domestic manufacturers remain highly interested in collaborating with international giants that bring capital and advanced technology. A good example is the joint venture between Dongfeng and Cummins Inc., where both parties hold 50% stakes. Dongfeng Cummins Engine Co., Ltd. has become highly profitable, partly due to Cummins’ global brand reputation, which helps the company secure overseas contracts.
Volvo, having previously learned from its mistakes and now partnering with Dongfeng, could potentially tap into new growth opportunities. With improved strategies and better alignment with the Chinese market, the company might be able to unleash significant potential in the future.
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