Scania to ramp up production from new China plant

Swedish truck maker Scania's establishment of a new global manufacturing facility in China is a "given" to beat its troubled production bottleneck, as the country is "the right place to build heavy duty commercial vehicles of the highest standards", its top executive said.

Christian Levin, president and CEO of Scania, made the remarks during an exclusive interview with China Daily earlier this month while on a visit to inaugurate the truck maker's industrial hub in Rugao, in East China's Jiangsu province.

At 2 billion euros ($2.3 billion), the new project is Scania's largest overseas investment in 60 years.

Covering about 800,000 square meters and with a planned headcount of 3,000 workers, the Rugao facility is Scania's third industrial production base after the ones in Sweden and Brazil, and its first fully owned factory in China.

Deliveries from the Rugao facility, which has an estimated annual capacity of 50,000 trucks, will begin later this year. This will be nearly double that of vehicles produced in its Brazilian plant in 2024. Scania delivered about 100,000 trucks last year.

"Timely, balanced and long-term" are the three words that best describe the latest investment, according to Levin.

The Rugao facility is "an insurance against risks". The advanced ecosystem and technologies available in China address the problem of losing out on orders, which has afflicted Scania for years. It will improve the resilience of Scania's global production system against disturbances that may be caused by natural disasters, geopolitics or other unforeseen issues, he said.

Earlier this month, the United States announced plans to impose a 25 percent tariff on all medium and heavy-duty truck imports from Nov 1.

The new project ensures Scania will have a strong presence in three geographies. Product delivery time will also be shortened. While Brazil was Scania's largest single market by deliveries last year, Levin believes that the future growth potential lies in Asia, mainly China.

China became the world's largest heavy-duty truck consumer in 2010 by selling over 1 million such vehicles, and it has retained the top position ever since.

According to the China Automobile Dealers Association, a total of 67,600 heavy-duty trucks were sold in China in August, up 65.65 percent year-on-year and 3.89 percent on a monthly basis.

The Rugao facility is important for the long-term targets of the 134-year-old truck maker. It will serve China, Asia and beyond by "producing vehicles for a very long time to come". It will be an important part of the balancing of Scania's global production resources, said Levin.

Levin said he understands the uniqueness of the Chinese market, with rapid development speed being one of them. Therefore, Scania will adapt its products faster by giving more play to local manufacturing as well as research and development.

"Tough competition" is another feature of the Chinese market that Scania has never overlooked.

Data from the China Association of Automobile Manufacturers showed that the top 10 heavy-truck makers took up 97.58 percent of the market share in September. But they have started to cut prices by 30,000 yuan ($4,228) to 50,000 yuan for each vehicle since 2024.

Instead of competing in the traditional way by focusing on selling prices, Levin pointed out that helping customers to save costs and improve competitiveness are key to gaining market share in China.

It is for this reason that Scania has started leasing services in China. The customer can use a Scania truck by paying a monthly fee of only 19,000 yuan, rather than owning one. Other value-added services provided under the leasing contract, such as maintenance, insurance and driver training, can help customers focus on the core businesses of transportation while reducing costs such as fuel consumption, he said.

Customization is another highlight of Scania's strategy in China. A customized vehicle, designed for different purposes, be it tractor trailer or a chassis with superstructure, has the potential to clearly increase the competitiveness of Chinese and Asian customers, said Levin.

A good example is the newly unveiled Next Era, a tractor developed specifically for China.

To be churned out from the Rugao assembly line, it will be launched in the first half of 2026. The modular system introduced into the Rugao facility can more efficiently meet the various needs of customers at different performance levels.