November 15, 2012: Magneti Marelli, Hefei Jianghuai Automotive Co (JAC) and Hefei Lingdatang Collective Assets Management (Lingdatang) have signed an agreement to set up a joint venture to produce exhaust systems for the Chinese market.
Magneti Marelli will own 51 percent of the capital of the new company called Hefei Magneti Marelli Exhaust Systems Co while the Chinese partners will own a 37 percent share (JAC) and a 12 percent share (Lingdatang).
The JAC Group is one of the most important Chinese carmakers, and it is also engaged in the production of light commercial vehicles, heavy vehicles and buses. Lingdatang, on the other hand, is a financial company operating in the area of investment funds and in the real estate sector.
The JV will deal with the research, development, design, production and marketing of exhaust systems for motor vehicle engines, including intake manifolds, exhaust pipes, catalytic converters and mufflers. The JV will also provide technical consulting, assistance and other after-sales services dedicated to the carmakers operating on the Chinese market.
The industrial facilities of the new JV will be located at Taohua Industry Park, in Hefei city, 500 km west of Shanghai marked by strong industrial growth on a pre-existing facility. Production will kick off early 2013, with an initial workforce of 160 employees. Once the plant is fully operational, the production capacity is expected to exceed 900,000 pieces a year.
Magneti Marelli has been operating in China since 1996 with production facilities and research centres at Shanghai (with headquarters and in powertrain and lighting areas, in addition to the JV in Jiading with SAGW, involved in the production of hydraulic components for the robotized gearbox Freechoice), Wuhu (lighting and powertrain), Guangzhou (electronic systems), Hangzhou (JV with Wanxiang Qianchao Company for shock absorbers), Changchun (JV with FUDI for powertrain components) and in Changsha (exhaust systems).
The new JV company Hefei Magneti Marelli Exhaust Systems follows the opening of Magneti Marelli’s new plant at Manesar along with the existing facility at Pune and that at Changsha in China. With this, the company is expanding its presence in exhaust systems in Asia in both manufacturing and engineering capability. This will allow it to be competitive in the local markets and to serve more customers.
“The exhaust systems segment represents an important market and business in China says Eugenio Razelli, CEO of Magneti Marelli, “especially in relation to the issues of emission control and management and compliance with environmental regulations established at the government level, which are increasingly becoming more stringent. By entering into an agreement with an authoritative Chinese partner such as JAC, Magneti Marelli aims to create the best conditions in order to strategically position itself in this area and put together a competitive offer for local and international carmakers with production facilities in China.” The current JV comes on the heels of that entered in shock absorbers with Wanxiang and with Fudi for powertrain components.