Daimler, Beiqi Foton Sign Joint Venture Pact

(Beijing) - China's leading commercial vehicle manufacturer, Beiqi Foton Motor signed a joint venture agreement on July 16 with German auto giant Daimler AG to produce heavy trucks in China.

According to Beiqi Foton, the 50-50 venture will involve a total investment of 6.35 billion yuan, with a registered capital of 5.6 billion yuan. Foton will put in 2.8 billion yuan worth of Foton's Auman brand medium- and heavy-duty truck assets as investment, while Daimler will inject 2.8 billion yuan in cash.

The venture will produce medium- and heavy-duty trucks under the Auman brand using Daimler's technology in engines, at an annual production capacity of 100,000 vehicles and 45,000 heavy diesel engines.

The venture has been a long-awaited partnership between Beiqi Foton and Daimler as Foton's board approved the partnership in early January last year. In August 2009, a plant was set to open and start trial production in 2011. However, the plan was postponed due to delays in the regulatory approval process from the Chinese government.

CEO of Daimler Dieter Zetsche said in a company statement, "The joint venture with Foton Motor represents another key milestone in implementing our China strategy."

Daimler currently runs two joint ventures in China – a sedan manufacturing venture with Beijing Automotive Industrial Holding Company, Beijing Benz Automotive Co., and a car manufacturing partnership with Fujian Motor Industry Group Co., Fujian Daimler Automotive Co. In the first half of 2010, Daimler sold 59,000 vehicles in the Chinese mainland, up 122 percent from the same period last year.

On May 27, Daimler announced a 600 million yuan R&D agreement with BYD, a privately-owned Shenzhen-based carmaker, and plans to roll out electric vehicles in 2013.

Beiqi Foton is China's largest commercial vehicle manufacturer. The company sold 370,000 cars during the first half this year, up 29.4 percent year-on-year.