CNH and Kobelco end excavator alliance

CNH and Kobelco are to unwind their excavator joint venture, cross share holdings and distribution agreements in favour of non-exclusive licensing and supply agreements.

CNH, which owns the New Holland and Case construction equipment brands and is itself owned by Fiat Industrial, had operated in a global alliance with Kobelco Construction Machinery since January 2002.

The decade-long agreement saw the world’s markets divided between Kobelco and CNH, with Kobelco’s sales and marketing rights limited to the Japanese, Chinese, Southeast Asian and Australian markets.

But at the end of the year this agreement will end and Kobelco’s parent company Kobe Steel said new, non-exclusive licensing and supply agreements would take effect on 1 January, 2013.

Under the new agreement, CNH will continue to manufacture Kobelco-designed excavators at its factories in Calhoun, US, San Mauro, Italy and Belo Horizonte, Brazil. It will also source source some models, including short-radius excavators, direct from Kobelco in Japan under an OEM supply agreemnet. This is set to last for five years on completed machines and ten years for components.

This means CNH will continue to market full-sized excavators featuring Kobelco technology under its New Holland brand and compact excavators under its New Holland and Case equipment brands.

Kobelco Construction Machinery will also have the right to receive running royalties for the licensed hydraulic excavators manufactured by CNH for a five-year period until the end of December 2017.

Equity buy-back

At the end of this year, Kobelco and CNH will also end all equity holdings in each other. Kobelco's parent, Kobe Steel, will buy back the 20% stake that CNH currently holds in Kobelco, while CNH will buy back equity held by Kobelco in CNH's affiliate companies, including a 20% stake in the New Holland Kobelco Construction Machinery manufacturing and sales unit in Europe.

Kobelco, which said it had built a market share of over 20% in Japan and Southeast Asia, 13% in China (among non-Chinese manufacturers), and 10% in Australia, now plans to grow its business on its own and sell its excavators throughout the world .

It said it would independently rebuild its sales and service network in North America, South America, Europe, the Middle East, the Commonwealth of Independent States (CIS) and Africa.

Kobelco had operated on its own in these six markets prior to the formation of the global alliance with CNH, and said it would immediately make its excavators available here again.

"Opportunity"

Mario Gasparri, Head of CNH’s construction equipment brands said the change in relationship gave CNH the opportunity to build a stronger future for its customers, dealers and overall business.

"This change is vital because it lets us directly manage our business in all regions around the globe, including the Asia-Pacific region, which is home to the world’s fastest-growing construction equipment markets," Mr Gasparri said.