Sinotruk and Volvo Collaborate or End Huawan Truck Restart
Although the domestic car market continues to show some growth, the financial crisis has significantly impacted China's commercial vehicle sector. From June to October, the commercial vehicle industry in China faced a sharp decline, with production levels falling sharply. Notably, the world’s largest commercial vehicle company, the Volvo Group, had a joint venture in China called Huawo Truck Co., Ltd. After two years of production shutdown, recent reports suggested that the project might be restarting—but these claims have been denied.
"Is Huawo restarting? No," said executives from China National Heavy Duty Truck (CNHTC). "All the information about the restart is false." On November 29, Volvo Group (China) confirmed to reporters that the Huawo project was not resuming and that all related information was fabricated. In reality, Huawo, which had ceased operations for over two years, is now effectively dead.
Discontinued for Two Years
"Huawo? Is there anyone left? No one!" shouted an old worker from CNHTC at the site of the abandoned factory. The reporter visited the Huawo facility, which had been dormant for more than two years. Unlike other companies in the Heavy Industry Park, which were bustling with activity, Huawo appeared completely deserted. There were no workers, no machines running, and no signs of production.
A chain wrapped in plastic blocked the main entrance, and the workshop doors were locked. The factory area was empty, with no vehicles or parts associated with Huawo. In the autumn season, when leaves were falling, the contrast between Huawo and other companies in the park was stark—there were no leaves on the ground, and few people were around.
The joint venture between CNHTC and Volvo was the first heavy truck partnership in China. After nine years of negotiations, it began operations in 2004 and was once considered a model for foreign partnerships. However, this "marriage" quickly turned into a cautionary tale in China’s commercial vehicle history. Production started in 2004, but by October 2004, it had already shut down. Only 200 units were produced in 2005 before the plant closed completely in early 2006.
According to the security guard at Huawo, only senior managers came to work daily, while no employees were present. When the reporter contacted HR and finance departments on November 25 and 26, no one answered. A CNHTC representative later confirmed that Huawo had been shut down for two years.
According to statistics, the joint venture cost 1.6 billion RMB to build, and the plan was to produce 2,500 trucks in 2005 and 10,000 by 2008. But in reality, Huawo only managed to produce over 200 vehicles in 2005. Sales were sluggish, partly due to the high price of its trucks—two to three times higher than similar domestic models—which made them unattractive to Chinese consumers.
Brothers’ Wall
Both CNHTC and Volvo exchanged accusations. Volvo claimed that CNHTC had misappropriated technology, while CNHTC accused Volvo of failing to localize properly and implementing a technology blockade. On November 29, Volvo Group (China) stated that all information about the restart of the Huawo project was false. The company has not released any updates on the project.
According to a source within the heavy truck division, Volvo no longer talks about Huawo because the relationship between the two companies is minimal. After selling its sales rights to Volvo China, CNHTC became an outsider in the joint venture. Most components were imported, making Huawo more of an assembly line than a true joint venture.
This lack of collaboration has led to bleak prospects for future cooperation. Former Volvo China President Wu Yuzhang once criticized the situation, saying that Volvo had "drained water into others' channels." Meanwhile, the HOWO brand used Volvo’s technology, creating tension and turning a partner into a competitor.
Despite the failure of Huawo, the HOWO brand itself has seen success. With strong sales and exports, CNHTC has become a major player in the domestic market. However, many other joint ventures in the commercial vehicle sector have also struggled. Projects like the Volvo-FAW engine joint venture, Guangzhou Automobile and Hyundai, Dongfeng-Volvo, and Mercedes-Benz-Foton have either been delayed or canceled.
"Cultural integration is a big challenge," said Jia Xinguang, a domestic automotive expert. "Many joint ventures face internal conflicts." Additionally, Chinese consumers tend to prefer cheaper domestic trucks over expensive foreign models, even if they are less advanced. High prices often keep foreign brands out of the market.
In the case of Huawo, despite Volvo’s reputation for reliability and performance, the high costs and strict weight regulations in China made it difficult for their trucks to compete. Local alternatives, which are cheaper and offer comparable performance, have largely replaced them.
Despite the challenges, the heavy truck market in China remained strong in 2007 and 2008. Sales grew rapidly, and the sector showed signs of continued expansion. However, the future of joint ventures remains uncertain.
With national policies shifting toward supporting domestic brands, the risks for foreign partnerships are increasing. For foreign manufacturers, technical cooperation may become a more viable and profitable path forward.
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