(Yicai Global) May 15 -- American engine maker Cummins Inc. has formed a 50-50 joint venture with Chinese auto manufacturer Anhui Jianghuai Automobile Group Corp. (JAC) after taking over Navistar International Corp.'s stake in the unit.

JAC and Cummins Sales and Service Singapore Pte. Ltd. will share ownership of Anhui Jianghuai Navistar Diesel Engine Co., with Illinois-based Navistar withdrawing after forming the company six years ago, JAC said in a statement yesterday. The Chinese firm waived its preemptive right to purchase Navistar's shares.

The pair will gear the joint venture to upgrade and optimize its light-duty and mid-range engines to help improve the value of vehicles, the statement added, saying the firm expects to be able to make 250,000 engines a year once it becomes fully operational.

"I am delighted that Cummins is expanding our long-term relationship with JAC Motors," said Steve Chapman, Cummins Group vice president for China and Russia. "By strengthening our relationship, we can focus on becoming more competitive in our markets by developing and offering high-quality, clean and fuel-efficient products."

JAC will appoint the chairman and deputy general manager for the unit, and Cummins will pick its vice chairman and general manager.

The change of foreign ownership will not affect JAC's earnings for the year, it added.

Editor: James Boynton