MTU Friedrichshafen GmbH, a subsidiary of Rolls-Royce Power Systems, and China Yuchai International Limited’s main operating subsidiary, Guangxi Yuchai Machinery Company Ltd. signed an agreement to set up a 50/50 joint venture for licensed production of MTU diesel engines in China. Each party will invest 75 million RMB (about 10.5 million Euro) in the joint venture.

MTUThe joint venture will be based at GYMCL’s primary manufacturing facilities in Yulin City, Guangxi Province, in southern China and is expected to begin production in 2017. The joint venture will produce MTU Series 4000 diesel engines compliant with China Tier 3 emission standards with power outputs ranging from 1,400 to 3,490 kW, primarily for the Chinese off-highway market.

The joint venture engines will be marketed by GYMCL and MTU Suzhou within China and by MTU and its subsidiaries exclusively outside China. From 2020, GYMCL’s sales territory will be extended to selected countries in Southeast Asia including Vietnam, Thailand and Malaysia. After a ramp-up phase of 3 to 5 years, the scope of the joint venture might, subject to further discussion, be extended to research and development activities as well as potentially direct sales from the joint venture to the customer.