Deutz announced that it has agreed with AB Volvo not to proceed with their proposed Deutz Engine (China) Co. Ltd. joint venture the two companies had previously planned. The two companies had signed an agreement to establish a joint venture company in China to produce medium-duty engines for off-road applications to provide support for Volvo’s anticipated growth in off-road applications in Asia.

In November 2014, Deutz announced that both companies would conduct a strategic reassessment of the venture. After a thorough review, the companies decided not to proceed with the venture given the weak prevailing market situation in China.

The joint venture had not yet made any substantial investments. Deutz said it is still convinced of the Chinese market’s long-term potential. “It remains our stated objective to use Chinese production facilities in order to meet local demand from AB Volvo and other target customers and to this end we will be focusing on our Deutz Dalian Engine Co. Ltd. joint venture,” said Dr. Helmut Leube, Deutz chairman.

Deutz and the First Automotive Works Group, a Chinese vehicle manufacturer, have been running the Deutz Dalian Engine Co. to produce 3- to 8-liter diesel engines for the Chinese market.