CHINA REPORT
Following the opening of Yuchai’s Thailand factory, Guangxi Yuchai Machinery Co., Ltd. (Yuchai) and Kim Long Motor Hue Joint Stock Company, a subsidiary of Vietnam’s FUTA Group (Kim Long Motor), have signed a comprehensive strategic cooperation agreement in Vietnam. The two parties have jointly initiated the construction of an engine factory with a total investment of $260 million.
The engine factory, a collaboration between Yuchai Machinery Co., Ltd. and Kim Long Motor Hue, a subsidiary of Vietnam’s FUTA Group, will be invested in two phases, with the first phase expected to commence production in the second quarter of 2025. The factory will be equipped with a globally leading, highly automated engine assembly line, primarily producing Yuchai’s full range of diesel and natural gas engines for applications in commercial vehicles, engineering machinery, agricultural machinery, ships, power generation, and more, with an annual production capacity exceeding 12,000 units.
The establishment of the new factory will significantly enhance the level of Vietnam’s automotive industry. The products manufactured by this engine factory will meet the vehicle assembly needs of Kim Long Motor for the domestic market in Vietnam and also target exports to ASEAN and South Korea, aiding Kim Long Motor and Yuchai in more deeply engaging in global supply chain competition.
Yuchai plans to leverage its research and development technology, production assembly, and supply chain capabilities to build a world-class factory and promote joint growth with Kim Long Motor.
Source: zgjtb Read The Article
PSR Analysis: The establishment of the factory in Vietnam will further accelerate Yuchai’s strategic progress in the Southeast Asian market and ASEAN. In August this year, Yuchai Machinery Power System (Thailand) Co., Ltd. officially commenced operations in Samut Prakan, Thailand. This reportedly is the first overseas factory established by Yuchai, marking a significant milestone in Yuchai’s internationalization strategy and signifying an important step in the in-depth development of Yuchai’s overseas markets.
On the same day, the first K08 engine came off the assembly line of the Thai factory and was delivered to customers. Yuchai Machinery Power System (Thailand) Co., Ltd. mainly produces diesel engines, natural gas engines, and new energy power products. The first batch of products includes three major series: K08, S06, and S04.
Subsequent annual production capacity will be increased, and will be capable of producing Yuchai’s series of products ranging from 2 to 11 liters. At the same time, it will further strengthen the joint efforts with key partners such as Beiqi Foton to enhance product competitiveness and expand the Southeast Asian market. Through this strategic partnership, Yuchai’s product share in overseas markets, especially in the ASEAN region, will be significantly increased, laying a solid foundation for global business growth.
Yuchai sees Vietnam’s strategic position in the Southeast Asian region as important to reaching its goal of exporting products of the engine factory to the entire ASEAN as well as to South Korea and Japan.
Yuchai’s engine manufacturing investment in Vietnam is part of its international market strategy, which aims to reduce the impact of the sluggish domestic market and competition in the new energy market. PSR
Jack Hao is Senior Research Manager – China for Power Systems Research
