India’s Ashok Leyland takes majority stake in Optare while Arriva enters into pan-European ‘co-operation agreement’ with China’s King Long.

Two deals announced this week have paved the way for Indian and Chinese manufacturers to gain a stronger foothold in Europe’s bus manufacturing market.

India’s Ashok Leyland has increased its shareholding in Optare to 75.1%, allowing the Leeds-based bus builder to be fully integrated into Ashok’s ambitious global strategy of being among the top five bus manufacturers globally.

Meanwhile, Sunderland-based transport operator Arriva has entered into a pan-European “co-operation agreement” with King Long, one of China’s largest exporters of buses – a move that is viewed by some as the first major push by a Chinese bus producer into Europe. The new partnership will aim to develop new, innovative prototype vehicles for trial within Arriva’s bus operations in the UK and elsewhere in Europe.

Indian and Chinese suppliers have struggled to compete with Europe’s domestic suppliers in terms of product quality. The tie-ups with Optare and Arriva will help Ashok Leyland and King Long to develop the sophistication of their product range – Ashok is purchasing European expertise while King Long is developing it through a close partnership with a major operating partner.

Ashok’s acquisition of a majority stake in Optare was part of a refinancing agreement for the company, which employs 500 people. Commenting on the agreement, Optare CEO Jim Sumner said: “This is great news for Optare’s customers, employees and suppliers by securing stability and the long-term future of the business. The re-banking of Optare represents a critical milestone in the turnaround of the business and allows us to now complete the final phase of the three year plan which commenced in June 2009”.

He continued: “In addition, our recent move to a new factory in Sherburn gives us the capacity and modern assembly facilities necessary to capitalise on the additional sales our deeper partnership with Ashok Leyland will undoubtedly deliver.”

Optare this week confirmed that it had signed an £18m contract to supply 190 Solo SR midibuses to Cape Town, South Africa. The fleet of buses will form a key element of a new Bus Rapid Transit network.

Arriva and King Long worked together when the Chinese manufacturer supplied 174 new buses to Arriva’s operation in Malta earlier this year. The new agreement should see some prototype vehicles be tested within Arriva’s European operations by the middle of 2012, with a further King Long prototype due to be introduced into an Arriva operation in the UK by end of next year.

Commenting on the agreement, Chris Cassar, managing director of King Long Europe, said: “We have a young engineering team and they are listening carefully to the market demand. I hope that with this new cooperation agreement, we will deliver benefits for ourselves and Arriva.”

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