China Yuchai International Limited (NYSE: CYD) announced today that its main operating subsidiary, Guangxi Yuchai Machinery Company Limited, has entered into a joint venture agreement with Caterpillar (China) Investment Co., Ltd., a subsidiary of Caterpillar Inc., to establish a new joint venture company in China to provide remanufacturing services for and relating to GYMCL's diesel engines and components and certain Caterpillar diesel engines and components.
The new joint venture company to be held 49%-51% by Caterpillar China and GYMCL respectively, will use the remanufacturing technology of Caterpillar's Remanufacturing and Sustainable Solutions Division to provide state-of-the-art remanufactured engines and components to customers around the world.
Remanufacturing, one of the fastest-growing industries is a highly sophisticated form of recycling taking end-of-life components and transforming them into like-new products through salvage technology and state-of-the-art remanufacturing practices. Remanufacturing is a cost-effective alternative for customers as well as being an environmentally friendly repair choice which reduces waste and minimizes the need to use raw materials to make new parts.
With this new joint venture, GYMCL and Caterpillar will create a platform to remanufacture diesel engines and components which will provide lower-cost products to improve customers' profitability. The remanufacturing process will enhance China's sustainability and environmental preservation initiatives.
The Caterpillar China-GYMCL joint venture, once approved by the applicable regulatory authorities, is the first remanufacturing joint venture for both parties in China. The registered capital of the joint venture company is $20 million.
As a global leader in remanufacturing technology, Caterpillar already recycles more than 100 million pounds of end-of-life iron annually, much of which is used for remanufactured engine, transmission and hydraulic components.
Mr. Boo Guan Saw, President of China Yuchai, commented, "This joint venture will allow us to leverage Caterpillar's remanufacturing technology to provide high quality, low cost products for end-user customers. Our leading market position, broad product line of diesel engines, manufacturing expertise and large service network provide a solid foundation to grow the new joint venture. We also share a vision of enhancing sustainability and improving the environment while providing innovative cost-effective solutions to our customers. This is a win-win for Caterpillar, China Yuchai, our customers and our environment."