DaimlerChrysler Expanding In China

Posted on November 30, 2006

Looking to expand in the world’s fastest-growing vehicle market, DaimlerChrysler said it will pay $104 million for a 24% stake in Chinese truck manufacturer Beiqi Foton Motor Co. becoming its second largest shareholder. The purchase must still get approval from Foton's shareholders and the Chinese government.

DaimlerChrysler, the world's No.5 carmaker and leading commercial truck supplier, already produces Mercedes-Benz luxury cars and other car models in a joint venture with Foton's parent, Beijing Automotive Industry Holding, and has two other ventures in China, making multi-purpose vehicles and high-end buses.

"DaimlerChrysler now has a foot in the door of the local truck market, which has been growing at roughly 10 to 12% annually," Zhang Xin, senior analyst at Guotai Junan Securities, told Reuters. DaimlerChrysler's spokesman in China, Trevor Hale, told Reuters: "We have been in discussions with Foton for quite some time about cooperating to offer medium- and heavy-duty trucks in China." He declined to comment further on the company's strategy.

China's truck market is still dominated by domestic players. Sales of commercial vehicles -- vans, buses and trucks -- hit 1.5 million units in the first half of 2006, on track to beat last year's total of 2.5 million. Andreas Renschler, the member of DCX’s board responsible for the truck business, indicated that the company sought to strengthen its position in China and India through working with local partners to improve their products by adding technology.