Dec 15, 2020

Scania Expanding into Asia with New Factory in China

Manufacturing
Logistics
Acquisition
Supply Chain
Oliver Freeman
3 min
Scania AB, one of Sweden's leading manufacturers, looks to China for future production facilities as they expand their supply chain reach into the Asian vehicle markets.
Scania AB, one of Sweden's leading manufacturers, looks to China for future production facilities as they expand into the Asian vehicle markets...

Scania AB, one of Sweden’s leading manufacturers, will be establishing a wholly-owned truck productive facility in Jiangsu Province, around 100 miles northwest of Shanghai. Production is set to start in early 2022, and the move is seen as an important step in the company’s strategy to grow in China and the wider Asian market.

President and CEO Henrik Henriksson said: “Our expansion in China will be made step by step and in pace with the positive development of market conditions and the increasing demand for modern vehicles with a higher technology content that will follow. Until the end of the 2020s, we will make significant investments in order to benefit from this development as well as to establish China as the third leg in our global production structure.”

Vision for the Future

The rapid transformation into a more open and market economy-based system, which is currently taking place in China, has prompted Scania's decision to invest in the country. In order to increase competition, China is now opening up for foreign-owned companies to carry out operations in the country; and thereby also contribute to the major sustainability initiatives that are being implemented.

Henriksson said: “Increasing the presence in the Chinese market is crucial for Scania and the TRATON Group’s global growth. Our operations in the country will gradually be expanded and developed into a full-scale unit in Scania’s global production and supplier structure. The goal is not only to make China our third industrial leg but also to a regional centre for sales to other Asian markets,”.

Sweden and Brazil already house Scania’s first two production centres, so this latest move is seen as a springboard for further investments into the Asian continent. Although most research and development takes place in the headquarters in Sweden, some R&D operations are carried out in India currently. Scania's investments in China also include establishing research and development in the country, furthering strengthening the group’s foundations in the region.

“This will strengthen the international competitiveness and ability of Scania to be a leader in sustainable transport, as our presence provides increased access to leading technologies and expertise in areas such as electrified and autonomous vehicles,” added Henriksson.

  • Scania has 60,500 vehicles registered in in 100 countries
  • Expansion into China made possible by acquiring Nantong Gaokai Auto Manufacturing
  • China will eventually become the third global production hub along with Sweden and Brazil

China is the world’s single largest market for commercial vehicles and currently accounts for 40 per cent of global sales. The market is dominated by national manufacturers, but the demand for modern vehicles with higher technology content, better performance and higher availability is increasing with the need for more efficient logistics and sustainable transport. Scania’s entire product range of combustion engine technology for renewable biofuels as well as electrified products are therefore a good fit for the Chinese market. 

“We are aiming for sales in China at the end of the 2020s of at least the same volume as that of our current single largest market, Brazil.” concludes Henriksson.

Scania's establishment of its own industrial operations in China has been made possible through the acquisition of Nantong Gaokai Auto Manufacturing Ltd. 

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