Daily Management Review

Amid Increased Sales, Heavy Invest To Be Made By Daimler In Its China JV Plant


Investments amounting to 2.75 billion yuan ($415.32 million) for building Mercedes-Benz-branded Actros heavy trucks for the first time in China will be same by Germany's Daimler AG and its China commercial vehicle partner Beiqi Foton Motor Co, according to reports quoting a company document.
The two companies work through a joint venture called Beijing Foton Daimler Automotive (BFDA) in China's capital Beijing and the plans are to revamp this partnership. The two companies plan to add a production line which would enhance the manufacturing capacity of the JV’s factory to 50,000 Actros trucks a year, claimed reports quoting information from a construction document posted on the venture's website.
The companies plan to embark on the revamp next year, the reports said quoting a source familiar with the matter.
No comments on the news were offered by Foton and Daimler.
After the reports, the stock price of Foton jumped by their maximum 10 per cent daily limit.
Compared to the domestically made Auman trucks of the joint venture, the price of all Mercedes-Benz trucks currently sold in China is significantly higher because they are all imported.
In the first 10 months this year, 111,788 Auman trucks, that also has technology from Daimler, were sold in China by the truck joint venture which was 55 per cent higher compared to the same period a year ago.
There were also reports on this expansion plans in the media in August last year. However later reports quoting sources familiar with the matter had claimed that development in the plans was slow because of slowness in product and supply chain planning as well as in getting approvals from regulators and the impact from the novel coronavirus pandemic.
Daimler said in 2016 it planned to make Actros trucks in China by the end of the decade but has not since publicly given updates.
Last year, around 700,000 passenger cars in China were sold by Daimler, which also has a passenger car joint venture with Foton's parent BAIC Group. In the next decade, China will remain Mercedes-Benz's biggest growth market and in order to capture shifts in demand, the company would also adjust production locations, Daimler’s Chief had said last month.
Between January and October, there has been a 24 per cent year on year jump in the number of trucks sold in China on the overall, the biggest auto market of the world, 3.87 million units, primarily because of immense investment in infrastructure by the Chinese government as well as upgrading done by buyers to meet the tough emission rules.
But local companies including FAW's Jiefang, Dongfeng Motor and Sinotruk, which offer more competitively priced vehicles, essentially dominate the market.
International truck makers including MAN SE and Volvo trucks have engine partnerships with local companies.