Daimler AG to invest in BAIC Motor for a twelve percent stake

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Daimler AG and Beijing Automotive Group (BAIC) will significantly deepen their already strong strategic partnership: according to a binding agreement signed 1st February 2013 between executives of the two companies, Daimler AG is going to invest in BAIC Motor, the passenger car unit of BAIC Group, one of the leading automotive companies in China. This important joint strategic move comes ahead of an intention by BAIC Motor to launch an initial public offering (IPO) in the future. Daimler’s investment will take place through the issuance of new shares corresponding to a twelve percent stake in BAIC Motor.

Daimler’s Chairman of the Board of Management, Dr. Dieter Zetsche, Chief Financial Officer Bodo Uebber, and Hubertus Troska, Daimler’s new Board Member for Greater China, met today at the Mercedes-Benz Museum in Stuttgart with Chairman Xu Heyi, Deputy General Manager Zhang Xiyong, and CFO Ma Chuanqi of BAIC. As part of this meeting, they signed the contract between the two companies. 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 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%.

Dr. Dieter Zetsche, Chairman of the Board of Management Daimler AG and Head of Mercedes-Benz Cars: “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.“

Xu Heyi, Chairman of BAIC: “The partnership between BAIC and Daimler has entered into its best phase ever, with further deepened cooperation in accordance with the mutual interests and development plans between both companies. Daimler’s investment in BAIC’s stake will go a long way in accelerating the development of BAIC’s self-owned brand in terms of capital, technology, management, and brand. At the same time, this will help Mercedes-Benz to boost its business performance in China.“

Bodo Uebber, Chief Financial Officer of Daimler commented: “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.”

Hubertus Troska, Daimler’s Board Member responsible for China said: “BAIC is a long-standing, strategic partner of Daimler in China. With today's signing, we are bolstering this already strong relationship even further. I am very excited to be a part of our joint activities going forward.”

As one of China’s largest automakers, BAIC Group sold over 1.5 million vehicles in 2011. Daimler AG is one of the world’s most successful automotive companies. Both parties have already established a long-term strategic and trustful partnership, including significant investments in the Chinese automotive industry over the past years. Joint activities 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. This significant milestone means that all sales activities for imported and locally produced Mercedes-Benz cars will now be combined under one roof.

Overview: Daimler in China

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.

And 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.

Credits: Daimler AG

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Daimler AG infusing more cash for R&D activities

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As part of the daring challenge to reach the summit of the premium automotive industry by the end of 2020, Daimler AG (through its Mercedes-Benz brand) has understood that the core of a sustainable development is the massive investment in R&D activities. Dr. Dieter Zetsche, head of the Daimler management board and boss of the Mercedes-Benz Cars division, together with Dr. Thomas Weber, leader of the R&D department, have set up a coherent plan to technologically enhance the forthcoming vehicle generations with an extensive package of systems and dedicated solutions to ease the life of the driver and passengers and make driving an even safer and more enjoyable experience.

The extensive research in key areas such as vehicle security, on-board telecommunication or efficiency, helps gather crucial knowledge and understanding about the stringent areas that need urgent improvement. Moreover, along with the release of quality, state-of-the-art, pioneering technologies ahead of the competition that can make a difference on the market, it also forms a solid basis for future revenue. More money now means even more money in the future.

One of the very first technical masterpieces that will usher the automobile world very soon is the new S-Class, which comes packed full of latest technology. The W 222 will be the first luxury model to feature an Autonomous Driving Pilot and the first to recognize whether the driver travels on the wrong side of the road through the Real Life Safety system. Moreover, the new S-Class will be able to anticipate an imminent accident and mitigate as much as possible the negative consecutive effects of the incident. In some circumstances, the new Merc will also be able to take control of the car and increase the brake pressure or veer off to minimize the damages in the event of a head on/rear end collision with the help of an advanced Collision Prevention Assist (CPA) system.

You can read more interesting stuff about the new S-Class in our dedication section at http://bit.ly/V6daqo !

Returning back to the main topic of the article, the key approach directions for Mercedes-Benz in the next years are:

- the development of powerfully efficient internal combustion engines, which aim to achieve increased performance, more fuel economy and low levels of CO2 emissions;

- the development of sustainable powering solutions as an attractive alternative to traditional IC powerplants - all-electric and plug-in hybrid are the ways to go;

- the development of futuristic, yet highly helpful in-car communication systems that enhance the interactions: car-to-car, car-to-driver, car-to-internet

- the continuous involvement in the research and development of new technologies which provide a greater level of road safety and improve driving dynamics;

- seeking new opportunities and developing new means of personal mobility in the all-so crowded cities of the future that can ensure a smooth, rapid, safe and comfortable transportation from A to B

- a rigorous analysis of the ways that could help further improve the production process while also taking care of the environment

- the implementation of new (partially or fully recyclable), intelligent materials for the construction of the bodywork, the engine, the subsequent technical equipment and the customization of the interior: the biggest achievements are obtaining more advantages concerning kerb weight loss, torsional integrity and crash resistance compared to previous materials, as well as retaining the premium 'look & feel' for the shuttle-destined materials (in addition to creating a whole new 'touch' experience)

- further development in the areas of body aerodynamics and progressive-organic design for the future implementation of a new philosophy and visual identity that can be both fully practical, efficient, striking and immediately identifiable as a true Mercedes-Benz

The chart posted above shows the amount of cash some of the most important global companies spend on R&D, as well as the total number of employees involved. The analysis concerns the year 2010 and reveals Daimler AG occupies the 5th position in the rankings with a total of 4,852 millions of euro. Nearing the end of this decade, the investments made by the German entity into research and development is expected to double up to around 9,000 millions of euro.

Chart Source: www.bpb.de

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