Mercedes-Benz light vehicles settled in China with a capacity of 40,000 vehicles

Mercedes-Benz is set to expand its presence in China with the production of light-duty trucks. The Mercedes-Benz Lingting model is expected to begin manufacturing in China by the end of 2005. On November 29, DaimlerChrysler (China) Investment Co., Ltd. announced that the National Development and Reform Commission of China had finally approved a joint venture between DaimlerChrysler AG, China Motor Corporation from Taiwan, and Fujian Automobile Industry Group. This collaboration aims to produce Mercedes-Benz light vehicles in mainland China. After years of anticipation, the project has now taken shape. The three parties will share equal ownership, with a 50:50 stake in the new joint venture. The plan includes producing the Mercedes-Benz Sprinter and Vito/Viano models at a new factory in Fuzhou, Fujian Province. The facility will have a two-shift production capacity of 40,000 units annually, with a total investment of 200 million euros. The joint venture is expected to be established in mid-2004 and start operations by the end of 2005. The new company will serve as the production and distribution hub for Mercedes-Benz light vehicles in China and parts of Asia. According to an official from one of the partners, while the structure appears to be a tripartite agreement, the core partnership is actually a 50:50 collaboration between DaimlerChrysler Hong Kong and Fujian Automotive Group. The inclusion of DaimlerChrysler Hong Kong was necessary to comply with Chinese regulations, which limit foreign equity in automotive joint ventures to no more than 50%. To leverage existing resources, the project will utilize facilities and staff from Southeast Automotive, a joint venture between Fujian Automotive and China Motor. However, it was not possible to include China Motor as a shareholder in this new venture. Under Chinese policy, one party must hold at least 50% of the shares, making a three-way split unfeasible. DaimlerChrysler needed local production in China but lacked the necessary technology and brand control. To address these challenges, DaimlerChrysler Hong Kong was established as a separate entity, controlled entirely by DaimlerChrysler. Although the exact shareholding details were unclear, industry insiders believe DaimlerChrysler holds a dominant position. This is supported by the fact that DaimlerChrysler is the largest shareholder in Mitsubishi, which also owns a 15% stake in China Motor, the parent company of Southeast Automotive. The approval process for this project took several years. DaimlerChrysler had previously launched multiple unsuccessful projects in China, such as Beijing Jeep, which failed to meet sales expectations. In 1983, Chrysler and Beijing Automotive Industry Group formed Beijing Jeep, aiming for annual sales of 80,000 units, but the actual figure never exceeded 30,000. Other DaimlerChrysler joint ventures, like Yaxing Mercedes, faced similar issues with high pricing and poor market fit. After releasing its "DaimlerChrysler China Development Strategy" and resolving the Beijing Jeep issue, the approval for this new project was eventually granted. The joint venture will rely heavily on Southeast Automotive’s existing infrastructure, personnel training, and sales network. China Motor’s successful management and marketing framework also played a key role in the decision, as the group's experience in managing Southeast Automotive proved valuable. In summary, this joint venture marks a significant step for Mercedes-Benz in China, combining local expertise with international brand strength to establish a strong foothold in the growing Asian market.

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