Sinotruk and Volvo Collaborate or End Huawan Truck Restart
Although the domestic car industry continues to show some growth, the financial crisis has already taken a significant toll on China's commercial vehicle sector. From June to October, the commercial vehicle market in China experienced a sharp decline. Notably, the world’s largest commercial vehicle manufacturer, the Volvo Group, had a joint venture in China called Huawo Truck Co., Ltd. (referred to as "Hua Wo"). After two years of production shutdown, recent reports suggested that the project might be restarting—but this claim has been strongly denied.
"Has Hua Wo restarted? No," said an executive from China National Heavy Duty Truck (CNHTC). "All the recent information about the restart is false." On November 29, Volvo Group (China) also confirmed to reporters that all claims about the project resuming were untrue. In fact, Hua Wo, which has been idle for over two years, is now considered a dead end.
For more than two years, Hua Wo has been completely shut down. An old worker at CNHTC and Bridges Company, standing on the hillside near the site, exclaimed, “Hua Wo? Is there anyone left? No one!†The site, once a hub of activity, now lies abandoned. Unlike other companies in the Heavy Industry Park, which are bustling with workers and machinery, Hua Wo stands eerily quiet.
A chain wrapped in plastic blocks the main entrance. Inside, the workshop doors are locked, and the factory floor is empty. There are no vehicles, parts, or transport equipment related to Hua Wo. In the fall, when leaves cover other areas, Hua Wo remains leafless and nearly deserted. The silence is broken only by the occasional breeze, but no machines roar to life.
The partnership between CNHTC and Volvo was the first heavy truck joint venture in China. After nine years of negotiations, the joint venture began production in 2004. Initially seen as a model for foreign collaboration, the alliance soon faced challenges. Production started in October 2004, but by early 2006, it had completely stopped. Only 200 units were produced in 2005 before the project came to a halt.
According to the security guard at Hua Wo, only company leaders come to work daily, while no actual workers remain. Reporters tried contacting the HR and finance departments multiple times, but no one answered. A CNHTC official confirmed that Hua Wo has been inactive for over two years.
With a total investment of 1.6 billion RMB, Hua Wo was expected to produce 2,500 trucks in 2005 and 10,000 by 2008. However, sales proved sluggish. The trucks were priced two to three times higher than comparable domestic models, making them unattractive to Chinese consumers. As a result, the project failed and was eventually suspended.
Tensions between CNHTC and Volvo escalated, with both sides blaming each other. Volvo claimed that CNHTC had misappropriated technology, while CNHTC accused Volvo of blocking localization efforts. After Volvo sold its sales rights in China, CNHTC became an outsider in the joint venture. Most components were imported, and CNHTC had minimal involvement in the production process.
The future of the partnership looks bleak. Former Volvo executives have criticized how the HOWO brand used Volvo's technology without proper support. This led to a situation where Volvo felt sidelined, and the joint venture lost its competitive edge.
Despite the failure of Hua Wo, other Chinese heavy truck brands like HOWO have thrived. With strong domestic sales and overseas exports, CNHTC has become a major player in the industry. However, the broader trend shows that joint ventures in commercial vehicles face many challenges.
Other examples include the cancellation of the Guangzhou Automobile and Modern Commercial Vehicles joint venture, the near-suspension of Dongfeng VOLVO, and prolonged delays in the Mercedes-Benz and Foton Motor partnership. These cases highlight the difficulties of foreign partnerships in China's commercial vehicle market.
Experts point to cultural differences and high pricing as key obstacles. Many Chinese consumers prefer cheaper domestic alternatives, even if they lack the performance of foreign brands. Additionally, China's truck load restrictions limit the advantages of high-performance foreign models.
Despite these challenges, the heavy truck market in China is expected to grow rapidly in the coming years, driven by infrastructure development. However, whether joint ventures can capitalize on this opportunity remains uncertain. With national policies shifting toward supporting local brands, the risks for foreign partnerships are increasing.
In this evolving landscape, the future of commercial vehicle joint ventures in China is still unclear. While some projects have failed, others continue to explore new strategies. For now, the story of Hua Wo serves as a cautionary tale of the complexities of international collaboration in the automotive industry.
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