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CUMMINS INC 8-K Report, Corporate Update (Oct 20, 2006)

Filed October 20, 2006For Securities:CMI

Summary

Cummins Inc. announced on October 19, 2006, a significant strategic move to expand its presence in the burgeoning Chinese market through a 50/50 joint venture with Beijing-based Beiqi Foton Motor Company. This venture, named Beijing Foton Cummins Engine Company Limited (BFCEC), aims to produce two types of Cummins light-duty, high-performance diesel engines (2.8-liter and 3.8-liter) in Beijing, with an initial combined investment of $126 million from both partners. The engines are intended for light-duty commercial trucks, pickup trucks, and SUVs, aligning with the rapid growth projected for China's light-duty truck market, which was already the largest globally in 2005. The facility is slated to have an annual capacity of 400,000 units and is expected to commence production in 2008, meeting stringent global emission standards like Euro IV and above. This development underscores Cummins' commitment to international expansion and leveraging its technological expertise in key global growth regions.

Key Highlights

  • 1Cummins Inc. forms a 50/50 joint venture with Beiqi Foton Motor Company, named Beijing Foton Cummins Engine Company Limited (BFCEC).
  • 2The joint venture will produce Cummins' 2.8-liter and 3.8-liter light-duty, high-performance diesel engines in Beijing, China.
  • 3Initial combined investment in BFCEC is $126 million from both Cummins and Foton.
  • 4Production is slated to begin in 2008 with an annual capacity of 400,000 units.
  • 5Engines will be used in light-duty commercial trucks, pickup trucks, SUVs, and potentially other industrial/marine applications.
  • 6The venture targets China's rapidly growing light-duty truck market, projected to grow at 8% annually.
  • 7The produced engines will meet stringent emission standards, including Euro IV and above.

Frequently Asked Questions

The primary objective is to produce Cummins' light-duty, high-performance diesel engines (2.8-liter and 3.8-liter) in Beijing, China, to cater to the rapidly growing Chinese market, particularly for light-duty commercial trucks, pickup trucks, and SUVs.

Cummins Inc. and Beiqi Foton Motor Company are making an initial combined investment of $126 million into the joint venture, Beijing Foton Cummins Engine Company Limited (BFCEC).

Production is scheduled to begin in 2008, with the joint venture plant having an initial annual capacity of 400,000 units.

The 2.8-liter and 3.8-liter Cummins clean diesel engines are designed to meet stringent on-highway and off-highway emission standards worldwide, including Euro IV and above. They are intended for vehicles like light-duty commercial trucks, pickup trucks, multipurpose and sport utility vehicles, as well as some marine, small construction equipment, and industrial applications.