UPDATE: A previous version of this article stated that CNH Industrial does not currently manufacture a compact excavator line. It does and these new models will replace that lineup. We regret the error and the copy has been updated to reflect this correction.
Hyundai Heavy Industries and CNH Industrial today announced a partnership that will have the former manufacturing compact excavators for the latter.
Under the new 10-year agreement, Hyundai will build four compact excavator models that it will supply to CNH Industrial as “complete products.” According to Hyundai, another 10 models will be supplied in the form of knock down kits to be assembled by CNHI. However, according to Case Construction Equipment spokesman Bill Elverman, CNHI plans to eventually be more involved with manufacturing these kit models. In an email, Elverman tells Equipment World that the company’s San Mauro, Italy, facility “will be outfitted with the tooling and engage with actual manufacturing sometime in 2017.”
In its press release on the deal, CNHI says the agreement will allow the company to produce compact excavator models up to five tons at its plants, while sourcing OEM models from Hyundai above five tons.
CNHI will sell these 14 models, which will range from one-ton to six-ton excavators, under the Case Construction Equipment and New Holland Construction brands.
“Our ability to manufacture and source from our geographically complementary industrial base will allow for scale advantages in product costs to be realized, while ensuring that product lead times and logistics costs are minimized for our dealer network”, said Rich Tobin, chief executive officer of CNHI.
According to Hyundai, these compact excavators will go on sale around the globe, save for the South Korean market, in early 2017.
“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,” said S.G. Rhee, chief operating officer of HHI’s construction equipment division. “In view of the trend, we come to a conclusion that the alliance with CNH Industrial … will surely lay a solid foundation for the compact and mini-sized construction machine business of HHI’s Construction Equipment Division.”
For CNHI, the deal places a check mark next to the company’s goal of expanding its excavator product portfolio with this new compact lineup. Meanwhile, Hyundai says it expects the partnership to double its compact excavator sales. Hyundai currently offers three compact excavators between 0 and 3.5 metric tons and four models between 5.5 and 8 metric tons.
Under the deal, which has a three-year renewal option, the companies also plan to cooperate in the development of new models, upgrades for existing models and possibly the development of future powertrains.