STOCKHOLM/BEIJING (Reuters) – Swedish truck maker Scania, a unit under Volkswagen AG’s commercial vehicle arm Traton SE, has bought a truck company in China to start making vehicles for the first time in the world’s biggest auto market, it told Reuters.

FILE PHOTO: The logo of Swedish truck maker Scania is pictured at the IAA truck show in Hanover, Sept. 22, 2016. REUTERS/Fabian Bimmer

Scania acquired Nantong Gaokai based in China’s eastern city of Rugao, showed an official filing. The acquisition allows it to obtain a truck manufacturing licence in China.The move comes after Scania said it would invest in a battery assembly plant in Sweden as it explores future technologies.

Scania’s spokesman declined to comment on the time it will take to complete the manufacturing set-up, the planned capacity, or the models it plans to produce.

Nantong Gaokai was previously a unit under state-owned Jiangsu Gaokai Investment Development Group.

Jiangsu Gaokai did not respond to a request for comment.

Overall truck sales in China jumped 24% from January through October to 3.87 million vehicles, driven by government investment in infrastructure and as buyers upgraded to comply with tougher emissions rules.

Meanwhile, Chinese officials have been drafting new rules to make trucks cleaner, smarter and safer.

The market is largely dominated by local automakers including FAW Jiefang Group Co Ltd, Dongfeng Motor Group Co Ltd and Sinotruk Hong Kong Ltd, which offer more price-competitive vehicles.

All Scania trucks sold in China are imported and priced significantly higher than those of domestic rivals.

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International truck makers including MAN SE and Volvo trucks have engine partnerships with Chinese companies.

Reuters previously reported Daimler AG’s plan to build Mercedes-Benz-branded trucks through its joint venture with Beiqi Foton Motor Co Ltd in Beijing.

Reporting by Johannes Hellstrom, Yilei Sun, Joern Poltz and Alexander Hübner; Editing by Christopher Cushing

Via Reuters Finance