Daimler to take 12% stake in BAIC Motor
1 February 2013
According to a new binding agreement, Daimler AG will invest in BAIC Motor, the passenger car unit of BAIC Group. Daimler’s investment will take place through the issuance of new shares corresponding to a 12% stake in BAIC Motor. This move comes ahead of an intention by BAIC Motor to launch an initial public offering (IPO) in the future.
Daimler’s shareholding in BAIC Motor is subject to the approval by the relevant authorities. A closing of the transaction is expected by the end of this year or early next year. The move, making Daimler the first non-Chinese automotive company to take a stake in a Chinese OEM, deepens an existing strategic partnership.
The agreement includes that Daimler will receive two seats on the Board of Directors of BAIC Motor. The two companies also agreed that BAIC will increase its stake in the production joint venture Beijing Benz Automotive Company (BBAC) by 1% to 51% and will thus be able to consolidate this joint venture within BAIC ahead of its IPO. At the same time, Daimler will increase its stake in the integrated sales joint venture Beijing Mercedes-Benz Sales Service Co. by 1% to 51%.
Following our technical cooperation with BAIC Motor and the setup of our integrated sales company, we are now taking the next step in deepening our relationship even further. Our investment is a strong sign of the increased level of trust and cooperation between our two companies and clearly emphasizes the long-term commitment to a joint successful future of our two companies. It is also significant so that both companies can actively participate in the opportunities of the Chinese automotive market.—Dr. Dieter Zetsche, Chairman of the Board of Management Daimler AG and Head of Mercedes-Benz Cars
Through this strategic investment in BAIC Motor, we will be the first non-Chinese manufacturer to take a stake in a Chinese OEM. It also gives us the opportunity to be part of the growth of one of its major domestic participants. At the same time, our decision demonstrates the full support of our partner’s intention to publicly list its shares in the future, further strengthening BAIC Motor’s competitive position.—Bodo Uebber, Chief Financial Officer of Daimler
As one of China’s largest automakers, BAIC Group sold more than 1.5 million vehicles in 2011. Joint activities between Daimler and BAIC include BBAC, which has been producing Mercedes-Benz passenger cars since 2006; Beijing Foton Daimler Automotive Co., Ltd. (BFDA), which has been jointly manufacturing Auman-branded medium- and heavy-duty trucks since mid-2012; and most recently, the establishment of Beijing Mercedes-Benz Sales Service Co., Ltd.
Daimler in China is based in Beijing and includes Mercedes-Benz (China) Ltd, Mercedes-Benz Auto Finance Ltd, Daimler Northeast Asia Parts Trading & Services Co., Ltd., the joint ventures Beijing Benz Automotive Co., Ltd. (BBAC), Beijing Mercedes-Benz Sales Service Co. (BMBS), Beijing Foton Daimler Automotive Co., Ltd. (BFDA), Fujian Benz Automotive Corporation (FBAC) and Shenzhen BYD Daimler New Technology Co. Ltd., as well as sales companies in Hong Kong, South Korea and Taiwan.
Local production of Mercedes-Benz cars began with the predecessor series of the E-Class in the joint venture BBAC in 2006; the second C-Class series followed in 2008. BBAC has been producing the current E-Class in a long-wheelbase version tailored specifically for the demands of the Chinese market since May 2010; the first locally produced GLK rolled off the production line in Beijing in December 2011.
On the sales side, Mercedes-Benz Cars is represented in China with its complete product portfolio; around 210,000 vehicles were sold in the year 2012. Approximately 50 new dealers will be added to the sales network of already over 220 this year, making the brand increasingly present outside the Tier 1 cities.
China is already the fifth-largest sales market for Mercedes-Benz trucks. With a market share of more than 50% in the premium segment, Mercedes-Benz Trucks lead the market above all in the heavy-duty segment. In addition, Daimler is developing the volume segment of the world’s biggest market for commercial vehicles in a joint venture with Foton Motor, a Chinese truck manufacturer. Since mid-2012, the jointly produced medium and heavy trucks of the Auman brand have also been rolling off the production line in Beijing-Huairou.
In addition, Daimler has been producing Mercedes-Benz vans for the Chinese market in the Fujian Benz Automotive Corporation joint venture since April 2010.
Daimler Financial Services has been providing automotive financing in China through Mercedes-Benz Auto Finance China since 2009.
Together with BYD, Daimler has initiated the joint venture Shenzhen BYD Daimler New Technology Co. Ltd to develop an electric vehicle for the Chinese market. This joint venture was officially approved in March 2011.
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