In today’s automotive industry, there is no standardized cooperation model between domestic diesel engine manufacturers and vehicle producers. Industry experts suggest that these models have evolved over time, shaped by the development of China's auto sector. During the planned economy era, auto plants and engine factories had distinct roles, with the state managing all supporting issues. Chinese internal combustion engine companies primarily supplied agricultural vehicles. As China transitioned to a market economy, many central enterprises were decentralized, and the state no longer provided support. This led to industry consolidation, such as Dachai and Xichai joining FAW, while Chaochao entered Dongfeng. However, some companies like Weichai, Yuchai, and Shangchai continued to develop independently. With the rise of the market economy, cooperation models have diversified. Companies like Yuchai, Yangchai, Yunnei, and Changchai still operate as independent suppliers for light vehicles. Chaochai is now a subsidiary of Dongfeng Motor Corporation, while Xichai is part of FAW Group. Dashicha has transformed into a joint venture between FAW and DEUTZ. Similarly, Dongfeng Cummins, Xi'an Cummins, and Chongqing Cummins are joint ventures between Cummins Inc. and Chinese partners. Weichai stands out as a unique case, often seen as a difficult-to-replicate model that has achieved control over automakers. Ni Hongjie, chairman of the China National Internal Combustion Engine Industry Association, believes that the development of internal combustion engine companies is dynamic, and future cooperation models will continue to evolve. He emphasizes that large-scale automakers globally aim to have their own engine factories, and asset reorganization in China will accelerate due to market competition. Many independent diesel engine companies have joined auto groups to secure stable support. For example, Xichai joined FAW during a restructuring phase, becoming a specialized branch. It provides engines for FAW's Jiefang J6 heavy trucks. Xu Wuying from Xichai explained that their engines are developed jointly with FAW's technology center, aligning with FAW's product plans. Despite the stability of being part of a vehicle company, market competition can limit growth. Xichai has also expanded its partnerships, collaborating with Shanghai Volkswagen Bus and other bus companies. They emphasize adapting to the market and exploring diverse cooperation methods. Chaochai, now a subsidiary of Dongfeng, recently established a joint venture with Jianghuai Automobile Co., Ltd. This move aims to expand external markets and meet growing demands. Zhang Guijun noted that while Chaochai is part of Dongfeng, it maintains a separate relationship with Jianghuai, without direct asset ties. Compared to Western practices, Chinese auto companies still lack openness in managing diesel engine plants. Most Western groups use capital management rather than direct control, allowing more operational freedom. Ni Hongjie predicts that due to market competition, asset restructuring will speed up. Local governments should focus on market conditions rather than administrative orders. Independent diesel engine companies like Yuchai, which has strong R&D capabilities and long-term partnerships, demonstrate the potential for success. While many diesel companies remain independent, most focus on specific markets. Yangchai, for instance, specializes in light vehicles, supported by customers like Nanjing Iveco and Beiqi Futian. Most diesel engine plants for light vehicles are independent suppliers, as producing engines for small vehicles is not economically viable for dedicated plants. Sino-foreign joint ventures are popular for technology transfer and market expansion. Dachai, after joining a joint venture with Deutz, now targets broader markets, leveraging Deutz's global sales network. Such collaborations allow Chinese companies to access advanced technologies and international markets. Cummins, a major player, has established several joint ventures in China, including Dongfeng Cummins and Xi'an Cummins. These partnerships help Cummins expand its presence in the Chinese market through local production and technology sharing. Weichai's model, characterized by holding vehicle factories and forming a complete industrial chain, is unique. Tan Xuguang, CEO of Weichai Power, emphasizes strategic unification, resource sharing, and independent operations. Weichai's success in the capital market highlights its ability to restructure and grow through mergers and acquisitions. Overall, the evolving cooperation models between diesel engine companies and vehicle manufacturers reflect the dynamic nature of China's automotive industry. As market demands change, companies must adapt, whether through integration, independence, or joint ventures, to ensure sustainable growth and competitiveness.

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