China Yuchai International, a New York-listed arm of Singapore's Hong Leong group, is facing a write-down of 438 million yuan (about HK$407.34 million) after suffering problems trying to start up a heavy-duty engine production line in Guangxi province. Commercial production of diesel engines for heavy trucks and big buses should have begun late last year, but not one engine has come off the production line and none seem likely to in the near future. Prototypes have not performed well in road tests, with China Yuchai blaming technical difficulties on unreliable engine components supplied by domestic manufacturers. It also complains that non-domestic components are not available as an alternative. A China Yuchai spokesman said: 'In light of these difficulties, it is unclear when commercial production will commence. In addition, due to the delay, China Yuchai will no longer be able to fully benefit from the competitive advantage of an early entry into the domestic market for heavy-duty diesel engines.' Because of its late entry into the market, China Yuchai warned, future sales volume and profitability could be significantly lower than it projected when the firm listed in 1994. It has decided to write down the book value of the Yulin city production plant by 366 million yuan, in line with United States accounting standards. A further 72 million yuan has to be written down to reflect wear and tear on equipment used to develop the prototypes, which is now in need of extensive refurbishment. The machinery was purchased from an affiliate of Ford Motor in Brazil in 1992. China Yuchai's local joint venture partner is Guangxi Yuchai, the mainland's largest diesel engine manufacturer. Despite the many problems, China Yuchai said it was optimistic about the joint venture's longer-term viability. 'Although the delay in commercial production of the 6112 heavy-duty diesel engine has adversely affected expected future sales volume and profitability, China Yuchai believes that, as road conditions in China improve, there will be continued demand for heavy-duty diesel engines,' the spokesman said.