Scania to Launch Euro 2 Billion China Factory, Eyes Asian Expansion

Scania, Swedish truck maker, plans to establish a facility that will cost €2 billion (or, US$2.28 billion) in Rugao, Jiangsu province, China, by October. Scania CEO Christian Levin indicated that this will be the company's third manufacturing base globally, following Sweden and Brazil.

Overall, Levin noted that the Chinese facility will be able to produce up to 50,000 vehicles per year - nearly double the Brazilian facility's production in 2024. Levin noted that more demand for parts and equipment from South America could be stimulated with the movement of Scania towards the fast-moving transport technology of China.

Key Highlights:

• Scania to open €2 billion truck plant in China by October, its third global production hub.
• New Chinese facility to reach 50,000 vehicle capacity, boosting demand for South American parts.
• US$350 million to be invested in Brazil for clean transport and electrification through 2028.

At the same time, Scania is preparing to commence a new investment cycle in Brazil worth US$350 million, starting in January 2024 and continuing until 2028. The investment will be focused on the development of clean transport innovations, including electrification, specifically at its hub in São Paulo. The multi-region production strategy where Scania sells the same products and solutions from Europe and South America has helped Scania to become stronger in those markets. In addition, Scania's lack of a strong presence in Asia has presented some logistical concerns related to delivery times to customers.

Also read: China Plus N Strategy: The Future of Manufacturing Diversification

Levin mentioned that he continues to be concerned about trade tensions in the world with the U.S. however, he is optimistic about the Mercosur-EU trade agreement which may further enable Scania to be competitive in Latin America.