Daimler in truck deal with Foton

By Li Fangfang (China Daily)
Updated: 2010-07-17 09:05
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Daimler in truck deal with Foton

Ulrich Walker (left), Daimler AG's chairman for northeast Asia, and Xu Heyi, chairman of Beiqi Foton Motor Co Ltd, attend a signing ceremony in Beijing on Friday. [Nelson Ching / Bloomberg]


BEIJING - German commercial vehicle maker Daimler AG on Friday said it will make heavy trucks in China through a joint venture with Beiqi Foton Motor to further expand its presence in Asia and the mainland.

The 50-50 joint venture has been set up with total investment of 6.35 billion yuan ($937 million) and also involves an affiliated engine plant. It will have an annual production capacity of 100,000 vehicles and 45,000 heavy diesel engines.

The National Development and Reform Commission has cleared the project and work will commence after receiving the business license from the Ministry of Commerce, said Daimler sources.

Medium- and heavy-duty trucks made by the joint venture will be distributed under the current Foton Auman brand. For products that are powered by Mercedes-Benz engine, in addition to using Foton Auman brand, they will be labeled appropriately to designate the Mercedes-Benz technology.

Foton's success in China and broad distribution network, combined with the technology and know-how of Daimler's commercial vehicle division, will greatly benefit both companies.

"The joint venture offers us an excellent springboard from which we can achieve growth, profitability and expansion in China, and with Foton as a global partner, in the international markets as well," said Andreas Renschler, member of Daimler's Board of Management and Head of Daimler Trucks and Daimler Buses.

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With the Foton venture, Daimler is the only global auto company that has alliances in all industry segments, said Ulrich Walker, chief executive officer and chairman of Daimler North East Asia.

Wang Jingyu, chief executive officer and president of Foton Motor, said the venture marks the Beijing-based company's first step towards global businesses and collaborations.

China has been the world's biggest truck market, contributing more than 50 percent of the total sales. Last year, the domestic truck market grew by 32 percent year-on-year, with sales of 2.96 million units.

Foton Motor, subsidiary of Beijing Automotive Industry Corporation, which is Daimler's current partner in passenger cars, has grown very quickly since its entry into the truck business in 1998. Last year it sold 82,234 heavy-duty truck units and already plays a key role in China's truck segment.

Daimler has occupied 60 percent of China's high-end imported heavy-duty truck market with around 2,000 units sold per year.

Its three-way venture with Fujian Motors Group and China Motors Corp from Taiwan is targeting sales of 8,000 units of vans this year.