Daedong wins $52 mn engine order from Doosan Bobcat

South Korea’s No. 1 agricultural machinery maker Daedong Corp. will supply multicylinder diesel engines to Doosan Bobcat Inc. for five years, a deal expected to pave the way for a rise in Daedong’s engine sales at home and abroad.

The Korean industrial machinery maker, better known under the brand name Kioti in the US, announced on Thursday it has bagged a deal to supply 1.2 and 1.8-liter multicylinder diesel engines to the North American operation of Doosan Bobcat, the construction equipment unit of Korea’s major power plant builder Doosan Enerbility Co.  

The supply deal, in effect until September 2028, is estimated at 70 billion won ($52 million), accounting for about 5% of Daedong’s consolidated sales in 2022.

The company expects the latest engine deal with Doosan Bobcat to improve its brand awareness in the global industrial engine market.

Doosan Bobcat is considered a premium industrial machinery brand in the US, where it enjoys the No. 1 position. Its operating profit in the second quarter ended in June this year jumped more than 50% on-year to 466.5 billion won with sales up 20.5% to 2.7 trillion won.

Daedong said it will expand the engine lineup for Doosan Bobcat following the latest deal.

Daedong was Korea’s first farming machinery maker to mass-produce single-cylinder diesel engines in 1966. It developed its first multicylinder engine with its proprietary technology in 1983 and currently supplies a wide range of diesel engines from 1.2 liters to 3.8 liters to customers at home and abroad.

MORE INVESTMENT IN ENGINE BUSINESS EXPANSION

While seeking to secure more long-term engine orders like that with Doosan Bobcat, Daedong plans to ramp up investment in improving the performance and quality of its engines to reinforce its engine business.

It recently spent 20 billion won to build a heavy agricultural machinery lineup and expand its engine business, and in 2021, it became the first farming equipment manufacturer in Korea to develop a 3.8-liter diesel engine (4JTA) with 100-140 horsepower.

Since then, it has strived to develop new engine models that can improve the competitiveness of its compact tractors and construction equipment and finally rolled out a new 1.2-liter diesel engine with 20 horsepower earlier this year. 

The new engine boasts 16% higher maximum torque, a 2.8 times higher torque rise and 4% better fuel consumption than its predecessor, the company said.

This is installed in the company’s agricultural machines with 20-30 horsepower that have risen in popularity in North America and Europe. This is the same engine that Doosan Bobcat will receive from Daedong.

Founded in 1947, Daedong is a family-owned company that manufactures compact tractors, multipurpose vehicles, lawnmowers, compact construction equipment and engines.

Its wholly owned subsidiary Daedong-USA Inc. sells its products under the Kioti brand, the third-largest compact tractor brand in North America with a single-digit market share, trailing Kubota with 38% and John Deere with 19%.

It aims to double its compact tractor market share in North America by targeting the growing hobby farming market there, the company recently said.

Write to Hyung-Chang Choi at calling@hankyung.com

Sookyung Seo edited this article.