Hyundai and CNH Industrial in mini excavator alliance

Manufacturers Hyundai Heavy Industries (HHI) and CNH Industrial have joined forces in a ten-year global mini excavator supply and marketing agreement.

The companies said the strategic alliance would see CNH market four mini excavator models supplied by HHI, while CNH would market a further ten mini excavator models that HHI would supply as license production kits. The 14 models in total range from one to six tonne operating weight.

Thanks to the agreement, HHI said it expected doubled increase in sales of compact excavators over the next ten years. It said mini excavators to be rolled out under the agreement would hit the global market from early 2017.

As well as global manufacturing licensing and OEM components supply, the companies said the scope of the agreements also included spare parts supply.

Moreover, the two companies said they had agreed to jointly develop new models and upgrade existing models.

CNH said the deal complimented its investment strategy for mini excavator product expansion. It said the two companies would benefit from synergies in product development, sourcing, manufacturing, and possible future powertrain opportunities.

CNH said it would also have the opportunity to produce mini excavator models of up to five tonnes at its plants and source OEM models above five tons

The agreement has a ten-year term with a three-year renewal option. It applies globally, excluding the South Korean market.

Synergies

“This relationship brings together the know-how and expertise of two leading global construction equipment manufacturers, allowing us to take advantage of synergies in terms of technology selection and adaptation, component sourcing, and research and development costs,” said Rich Tobin, CNH CEO.

“Our ability to manufacture and source from our geographically complementary industrial base will allow for scale advantages in product costs to be realised, while ensuring that product lead times and logistics costs are minimised for our dealer network,” he added.

And S.G. Rhee, COO of HHI’s construction equipment division, said, “We have noticed that the global demand for the mini-excavator market has been more stable than the bigger-sized construction equipment, and we also expect that the demand continues to increase for years to come.

“In view of the trend, we come to a conclusion that the alliance with CNH Industrial which has multiple brands including Case Construction Equipment and New Holland Construction will bring a win-win solution for both companies. Moreover, we believe that the partnership will surely lay a solid foundation for the compact and mini-sized construction machine business of HHI’s construction equipment division.”

J.C. Jung, CEO of HHI Europe, added, “This strategic alliance will result in an expansion of our Hyundai compact excavators’ product range; new models will be developed and existing models will be upgraded with additional options. Naturally, Hyundai dealers in Europe will benefit from this to grow their business and provide even better solutions to their customers.”