Monday 31 March 2014

€1 billion boosts Daimler/BAIC output in China

Daimler AG and its Chinese partner Beijing Automotive Industry Corporation (BAIC Group) have signed an agreement on the further expansion of the production capacities of their joint venture Beijing Benz Automotive Co., Ltd. (BBAC).

With this agreement, Daimler is boosting its business activities in China as well as its strategic partnership with BAIC. Of the €4 billion currently being invested in BBAC, the €1 billion specified in the agreement is to be used solely for the expansion of local car and engine production capacity until 2015.

Daimler AG chief Dr. Dieter Zetsche said “Meanwhile we are deeply rooted in China. The agreement we have signed shows once again that we are making steady progress in China together with our longstanding partner BAIC. The Chinese automobile market continues to have great potential. We want to participate in this growth, also by expanding our local production.”

The existing production capacities at BBAC for the C-Class, the E-Class and the GLK will be more than doubled to over 200,000 per annum in 2015 – then including the compact GLA, which will go into production at BBAC next year – and will be further increased after that in line with market demand.

In 2013, BBAC put the first Mercedes-Benz passenger car plant outside Germany into operation. The four- and six-cylinder engines are used in the locally produced cars and the vans built by the joint venture Fujian Benz Automotive Co., Ltd. (FBAC).

The production line was designed with flexibility in mind and an annual capacity of 250,000 units a year is planned for the first phase. Higher numbers will accompany the ongoing growth in unit sales.

The agreement is a further step in the successful collaboration between the two partners and is based on a strategic framework agreement that was concluded in mid-2011.

With more than 2 million vehicles delivered in 2013, the BAIC Group is China’s fifth-largest automotive group and is listed in the Fortune 500 ranking of the world’s biggest companies. Daimler is one of the most successful automotive groups worldwide.

The two companies have been linked since 2003 in a long-term strategic partnership, involving substantial and continuous investments in the Chinese automotive industry from the beginning. Since November 2013, Daimler has a 12 percent stake in BAIC Motor, the car division of the BAIC Group.

One of the shared activities is the joint venture BBAC, which has been producing Mercedes-Benz cars since 2006 and engines since 2013. A new research and development centre goes into operation at BBAC this year.

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