Mercedes May Form Joint Venture With Brilliance

Eighth-Largest Chinese Automaker Rumored To Be In Market For Second JV Partner, After Successful Linkup With BMW

Brilliance Auto is looking to spread its manufacturing base rapidly to compete with larger domestic rivals

Brilliance Auto is looking to spread its manufacturing base rapidly to compete with larger domestic rivals

The auto blog China Car Times (via China Daily) reports that Brilliance China Auto, China’s eighth-largest automaker, may form a new joint venture focused on commercial vehicles with Mercedes-Benz. China Car times notes that the potential joint venture would have a target production rate of 40,000 vehicles per year.

While the laws surrounding foreign-Chinese joint ventures are somewhat murky — with conflicting reports suggesting that foreign companies are unable to form more than one such venture in China at a time (a potential problem for Daimler, which is already linked with Beijing Auto Works) — China Daily’s report seems relatively optimistic that the Mercedes-Brilliance alliance will move ahead:

The tie-up with Daimler AG, Mercedes-Benz’s parent, will focus on converting Mercedes’ commercial vehicles into special purpose models, said Brilliance Chairman Qi Yumin at a media briefing in Shenyang last Friday.

“The market for special purpose vehicles has potential. Although it won’t have big market share, the profit margin is promising,” said Qi.

Daimler produces Mercedes-Benz premium sedans in the capital city under partnership with Beijing Automotive Industry Holding Corp (BAIC). It also achieved agreement with BAIC’s subsidiary Beiqi Foton Motor Co, China’s largest commercial vehicle producer, earlier this year to set up a medium-to-heavy truck venture.

In 2007, the German automaker also joint invested 249 million euros with Taiwan’s China Motor to establish a 50-50 venture with the Chinese mainland’s Fujian Motor, producing vans with annual production capacity of 40,000 units in Fuzhou. The production will start this September.

“At current stage, we don’t have plan to establish the second light commercial vehicles joint venture in China other than our Fujian facility,” said Wang of Daimler. “As for the special purpose vehicles modification business, we have already two partners in China, Zhejiang Zhongyu Group and Shanghai Pingzhi Auto.”

Moreover, BAIC, which just lost bid for GM’s ailing Opel, has transferred its focus to Fujian Motor’s stake in Daimler cooperation inside the country.

The China’s fourth largest auto group plans to pay around 700 million yuan for a 40 percent stake in the van venture, leaving Fujian Motor 10 percent shares.

“The major stake in Fujian Daimler venture’s transfer to Daimler’s original local cooperator BAIC makes it possible that Daimler can form a new plant with new Chinese partner, as Chinese government regulates that the foreign automaker can only have two Chinese partners to producer vehicles,” said an anonymous auto analyst.

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