The two companies signed the agreement today establishing Shanghai New Holland Agricultural Machinery Corp., Ltd. Annual output is expected to reach over 18,000 tractors and about 16,000 engines within five years, with initial employment at 1,550 people. CNH will hold a 60 percent equity share and Shanghai Tractor will hold the remaining 40 percent equity share. The joint venture company will be based in Shanghai Tractor's existing facility in Shanghai.

"The combination of our companies creates a powerful joint venture company. Shanghai Tractor leads tractor sales in China and CNH is the number one manufacturer of tractors and combines worldwide," said Paolo Monferino, president and chief executive officer of CNH Global. "Shanghai New Holland will have the benefit of the New Holland brand's depth of technology and broad distribution as well as Shanghai Tractor's distribution channels and excellent reputation."

"We expect this joint venture company will foster improved local economic activity through New Holland's advanced technology and increased farm productivity in the world's most populous country," Monferino added.

According to terms of the agreement, CNH will make available certain of its New Holland tractor technology and will integrate Shanghai New Holland into its global sourcing pattern. As the joint venture develops and market conditions allow, CNH and Shanghai Tractor expect the joint venture to introduce other agricultural equipment, such as combine harvesters. Shanghai Tractor will open its distribution network to the joint venture company.

"Shanghai New Holland Agricultural Machinery Corp. Ltd. is an alliance of two strong companies. We expect our joint venture to capitalize on each party's advantages and to share the resources of both sides to maintain the leading position in the Chinese agricultural equipment industry. We expect the JV to participate in the process of globalization of the Chinese economy and ultimately be a world-class supplier of agricultural machinery," said Li Ji Rong, general manager of Shanghai Tractor and Internal Combustion Engine Corp.

Shanghai Tractor is the leading manufacturer of 50-65 horsepower tractors in China. Through Shanghai New Holland and its Harbin New Holland joint venture, CNH's New Holland brand will now offer a full range of horsepower options within China.

Shanghai Tractor & Internal Combustion Engine Corp., a wholly owned subsidiary of Shanghai Automotive Industry Corporation (Group), is the recognized leader in medium horsepower tractor applications and serves to foster the increasing mechanization of farms throughout China. The company has 80 percent market share in its related segment and has significant expertise in medium horsepower tractor applications. Shanghai Brand tractors are a well-known trade mark authorized by the City of Shanghai and in each of the last five years, have been awarded the title of Shanghai Famous Brand Product and Customer Satisfaction Product.