Cat-Nav alliance resurfaces — in China

SHANGHAI, China — Caterpillar and Navistar International are in talks with China’s Jianghuai Automobile to set up a 50-50 joint truck and heavy-duty engine venture, according to Reuters.

The two U.S. companies, which are also joining forces in producing a big bore 15-liter MaxxForce engine for the North American market in the next few years, hope to get a piece of China’s growing $22 billion heavy truck market.

They join Daimler Trucks and MAN, which recently struck deals with local state-backed partners.

The Chinese government’s stimulus measures aimed at supporting a recovery in the world’s third-largest economy is already fuelling a boom in the retail automobile industry.

A source told Reuters that the three companies have a deal in principle but have the to sign off on the details.

Heavy truck sales in China rose 11.75 percent to 541,256 units in 2008, more than double the level in 2003.

Such a deal could also bolster Jianghuai Auto’s market exposure throughout the rest of the world, the source said.