Volvo, Dongfeng to Form Chinese Truck Venture

Volvo AB has agreed to form a commercial truck joint venture with Dongfeng Motor Group Co. The alliance would make Volvo the world's largest producer of heavy-duty trucks, the company says.

The tie-up is subject to approval by Chinese regulatory authorities. The partners aim to complete the deal in about a year.

Volvo will invest 5.6 billion yuan ($892 million) for a 45% stake in the venture, to be called Dongfeng Commercial Vehicles. The maker of Mack and Volvo trucks says it will share engines and powertrain components, product platforms and purchasing with the partnership.

Dongfeng Motor, which will own the balance, plans to contribute a majority of its medium- and heavy-duty commercial vehicle business to the venture. The Chinese truckmaker aims to make Dongfeng a global truck brand.

Volvo seeks a bigger foothold in China, where it sold only 1,900 trucks in 2011.