Volvo Trucks’ partnership with Dongfeng set to materialize next year image

The joint-venture between Dongfeng’s commercial vehicle division and Swedish manufacturer Volvo may finally be approved next year.

According to a report from Economic Observer News, the two parties have agreed to set up a new joint venture company in 2012, with Dongfeng to hold the majority share of 55 percent. The materialization of the new partnership depends on Nissan, who would pull its investments from Dongfeng’s commercial vehicle division, who in return would support domestic production and sales plans for the Infiniti and Renault brands.

The new joint venture will be based in Hubei’s northwestern city of Shiyan. Top executives from Dongfeng met with city officials last week and CEO Xu Ping reportedly discussed the idea of the Volvo partnership with them. Dongfeng and Nissan have been partners since 2003, when both companies began operating in the field of commercial vehicles.

However, according to Chinese regulations, foreign companies can’t have more than a 50 percent stake in a joint venture with a local manufacturer. Therefore, for the agreement with Volvo to work, Nissan would have to remove its investment in Dongfeng. In exchange for this, Dongfeng will help Nissan begin domestic production of Infiniti and Renault vehicles.