Daimler also conveniently announced today it would expand production with its current Chinese partner, BAIC.
The automotive world was rocked somewhat last week with the news that Geely’s chairman Li Shufu acquired a few shares of stock in Daimler. By few, we actually mean $9 billion dollars worth, which translates to a 9.69 percent stake in the company. That’s enough for Shufu to claim the position as Daimler’s largest shareholder, but before folks start mentioning terms like control and takeover of the German company, Automotive News Europe reports that there are no additional plans for Geely, nor any company that’s part of China’s Zhejiang Geely Holding Group, to acquire more Daimler shares.
Furthermore, Shufu seems to be addressing such concerns about Geely’s intentions. In a statement issued over the weekend, he said Daimler was “an outstanding company with a first-class management” and that it would “be an honor to support this unique team under the leader of Dieter Zetsche in the future.” Lastly, Shufu reportedly said that he would “fully abide by the company charter and governance structure of Daimler and respect its values and culture.
Geely hasn’t been secretive about wanting a close partnership with Daimler to help the Chinese firm develop and implement electric and autonomous auto technology. There was plenty of talk late last year about Geely allegedly making an offer to buy Daimler at a reduced stock price – an offer which was turned down with the caveat that Geely can buy shares on the open market.
In last week’s report, an anonymous insider said Shufu believed only two or three automakers would survive the changing automotive climate to exist in the future, which apparently is one of self-driving electric cars. With this investment in Daimler, it would seem Shufu believes the conglomerate will be one of the survivors.
To its credit, Daimler apparently welcomes Shufu to the fold but seems to suggest his stake won’t necessarily be an avenue to a partnership. Daimler spokesman Joerg Howe told Automotive News Europe the company knows Shufu well and holds him in high regards "in terms of his competency and focus on future developments.” However, Howe also said Daimler already has a strong presence in China through “a very strong partner with our existing cooperation with BAIC Motor.”
In what can be called a conveniently-timed announcement, Daimler issued a press release today that it will expand Mercedes-Benz production in China with BAIC. The two companies have a joint venture already in place called Beijing Benz Automotive Co. Ltd (BBAC) that will increase production and see an additional investment of €1.5 billion ($1.84 billion) from both companies.
“Local production is a strong pillar of our sustainable development in China. By deepening our cooperation with our local partner BAIC, BBAC will continue playing a key role for Mercedes-Benz in China,” said Hubertus Troska, Member of the Board of Management of Daimler AG, responsible for Greater China.
The full press release from Daimler on its expansion with BAIC is below. It seems things between Geely and Daimler could get very interesting.
Source: Automotive News Europe
Daimler to expand local Mercedes-Benz production with its partner in China
- Daimler and BAIC announce plans to expand local production of Mercedes-Benz vehicles due to expected market demand in China
- Local production hub Beijing Benz Automotive Co. Ltd. (BBAC) to operate additional production location
- Investment of over 11.9 billion RMB to prepare BBAC for further growth opportunities in the Chinese automotive market
- 2nd Beijing production location to facilitate complementary capacities for future new Mercedes-Benz models “Made in China, for China”, including battery-electric vehicles
Stuttgart / Beijing – Seeing further growth potential in the Chinese automotive market, Daimler and BAIC today announced plans to further expand local production for the Mercedes-Benz brand at their joint venture, Beijing Benz Automotive Co. Ltd. (BBAC). Through an investment totaling over 11.9 billion RMB (about 1.5 billion euros) by Daimler and BAIC, BBAC will prepare to operate another production location for high-quality premium vehicles, in addition to its established local production hub in Beijing’s Yizhuang industrial park. As part of the investment, a BAIC production facility located in the capital city’s Shunyi district will be transferred to BBAC, and modified to facilitate complementary production capacities for Mercedes-Benz cars. Furthermore, both partners will invest into new product localization at the future second Beijing-based Mercedes-Benz production facility.
Together with BAIC, Daimler continues developing BBAC into one of the most pioneering manufacturing hubs in Daimler’s global production network. The expansion of localization announced today will allow Daimler to respond to increasing market demand with local models tailored to Chinese customers’ needs, including electric products from Mercedes-Benz’s EQ brand. Daimler is dedicated to furthering New Energy Vehicle (NEV) development in China, already the largest NEV market globally, as part of the company’s “Made in China, for China” commitment.
“Local production is a strong pillar of our sustainable development in China. By deepening our cooperation with our local partner BAIC, BBAC will continue playing a key role for Mercedes-Benz in China,” said Hubertus Troska, Member of the Board of Management of Daimler AG, responsible for Greater China. “This production capacity expansion for BBAC will allow us to meet the expected growing demand for premium passenger cars in China, including for electric vehicles.”
“With over a decade of remarkable achievements, BBAC stands as evidence of the strong collaboration between BAIC and Daimler,” said Xu Heyi, Chairman of the BAIC Group. “As a model of Sino-German cooperation, BBAC has set successive benchmarks in terms of technology and quality standards. Going forward, both partners will continue to support BBAC as it provides additional, attractive products, contributing to the development of the Chinese automotive industry.”
This deepening of the cooperation between Daimler and BAIC further demonstrates the strengths of combining “Industry 4.0” and “ Made in China 2025”. By using smart manufacturing and increased digitalization, these efforts will help to further accelerate the manufacturing upgrade in China’s automotive sector. Mercedes-Benz’s unified global standards govern all production from BBAC. Production at the Shunyi facility will also follow the quality standards and processes, extending along the entire supply chain. As a full-fledged production facility, it will include a body shop, paint shop, press shop, as well as assembly lines.
“In 2017, Mercedes-Benz Cars has set the seventh production record in a row, also thanks to our strong growth in China. Globally, our plants run at full capacity, which is why we need further production facilities around the globe,” said Markus Schäfer, Member of the Divisional Board of Mercedes-Benz Cars, Production and Supply Chain. “BBAC is an integral part of our global production network of Mercedes-Benz Cars. With the new production location and our battery production planned in Beijing, we are progressing well with our electric initiative.”
China last year was once again Mercedes-Benz’s largest single market, with local production of around 430,000 units accounting for over 70% of total local sales. This allowed BBAC to become the largest Mercedes-Benz passenger car production plant worldwide in terms of output in 2017, driven by the outstanding market demand for premium cars of the three-pointed star. Employing over 11,000 staff, BBAC’s portfolio includes the C-Class, E-Class, GLA, and GLC vehicles. In 2017, Daimler and BAIC announced a joint investment of five billion RMB (about 655 million euro) for Battery Electric Vehicles and battery localization at BBAC as part of the electric initiative. The first model from Mercedes-Benz’s EQ brand, the EQC SUV, is scheduled to roll-off production lines by 2019.
These localization efforts are backed by strong local Research and Development, ensuring that Mercedes-Benz products meet the needs of Chinese customers. In 2014, the Mercedes-Benz Research and Development Center opened in Beijing, and has ever since grown the number of employees to today over 850 local engineers, designers and other functions. The Mercedes-Benz R&D Center recently also expanded cooperation with renowned Tsinghua University. Showing full commitment to electric mobility in China, both partners will jointly establish a Research Cooperation in the field of Battery Safety and Fast-Charging.