Cummins forms light-diesel JV in China

Cummins Inc. and Beijing-based Beiqi Foton Motor Company today signed an agreement to form a 50/50 joint venture company, Beijing Foton Cummins Engine Company Limited (BFCEC), to produce two types of Cummins light-duty, high-performance diesel engines in Beijing.

The engines primarily will be used in light-duty commercial trucks, pickup trucks, multipurpose and sport utility vehicles. Certain types of marine, small construction equipment and industrial applications also will be served by this engine family.

Foton, founded in 1996, is the largest producer in the light-duty truck market in China, selling more than 260,000 units in 2005. The two partners initially will invest a combined $126 million into BFCEC.

The joint venture plant will have an annual capacity of 400,000 units and will produce Cummins 2.8-liter and 3.8-liter clean diesel engines, which will meet stringent on-highway and off-highway emission standards worldwide, including Euro IV and above. BFCEC is scheduled to begin production in 2008.

"This joint venture provides Cummins with the opportunity to enter an exciting new market with the support of a well-respected partner," said Cummins President and Chief Operating Officer Joe Loughrey. "These new products represent the Company's latest efforts to expand its presence in the important China market, where Cummins has enjoyed considerable success over the years."

The light-duty truck market in China produced 860,000 units in 2005 and is projected to grow at 8 percent a year for the foreseeable future.

"Foton Motor is a strong player in China's commercial vehicle industry, while Cummins is a global power leader," said Foton President Wang Jinyu. "The cooperation between the two powerhouses will bring us a win-win relationship."

BFCEC represents a further expansion of Cummins' product line in China, where the Company already is the leading foreign producer of heavy-duty and mid-range diesel engines. Cummins began licensing its engine technology in China in 1981 and formed its first joint venture in the country in 1995.

Today, Cummins operates more than 20 facilities in China - including nine manufacturing sites (BFCEC will be the 10th) - representing all areas of the Company's business. Cummins consolidated and unconsolidated sales in China have exceeded $1 billion for the past two years.

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