Daimler Plans Joint China Truck-Engline Plant With Beiqi

Daimler AG (DAI), the world’s biggest truckmaker, plans a 135 million-euro ($166 million) joint- venture engine plant in China to fend off competition from an alliance Volkswagen AG (VOW) is forming with Scania AB (SCVB) and MAN SE. (MAN)

The factory in Beijing’s Hairou district will be part of Daimler’s truckmaking partnership with China’s Beiqi Foton Motor Co. (600166) and have capacity to make as many as 45,000 engines a year for the Auman commercial-vehicle brand, the companies said in a statement. Construction is scheduled to start in the first half of next year and be completed in 2014.

“We are consistently applying our principle of operating as globally as possible on the one hand and as locally as necessary on the other,” Andreas Renschler, head of the Daimler Trucks division, said in the statement.

The Beijing Foton Daimler Automotive venture is on schedule to start making Auman models in the third quarter, the Stuttgart, Germany-based company said June 22. Daimler is facing increased competition in trucks from Volkswagen, which appointed veteran Scania Chief Executive Officer Leif Oestling on June 1 to lead the integration of Soedertaelje, Sweden-based Scania and Munich-based MAN, in which VW has controlling stakes.

Daimler’s Beijing plant will manufacture engines for the Auman brand of the type currently used by the German company’s Mercedes-Benz commercial vehicles in Europe and South America. The company plans to increase the proportion of engine components obtained locally to 65 percent in the long term from the current 40 percent, it said.

Daimler rose as much as 1.7 percent to 38.15 euros and was trading up 0.6 percent at 11:20 a.m. The stock has gained 11 percent this year, valuing the company at 40.3 billion euros.

Truck brands owned by Daimler in addition to Mercedes-Benz include Freightliner in the U.S. and Fuso in Asia. Daimler Trucks contributed 27 percent of group revenue in 2011, and it has a target of increasing deliveries to 500,000 vehicles in 2013 from 425,756 in 2011. The unit plans for sales to rise to more than 700,000 trucks by the end of the decade.

To contact the reporter on this story: Alex Webb in Frankfurt at awebb25@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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