China Motor, DaimlerChrysler to produce commercial vans in China

Dec 12, 2003 Ι Industry In-Focus Ι Auto Parts and Accessories Ι By Quincy, CENS
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Taipei, Dec. 12, 2003 (CENS)--Taiwan's China Motor Corp. recently claimed that its commercial van joint venture with DaimlerChrysler AG has won approval from mainland China's State Council to produce light commercial/passenger vans in Fuzhou, Fujian Province.

China Motor president Su Chnig-yang made the statement at a press conference to demonstrate his company's remodeled Freeca commercial van in Taiwan.

Su said that the venture is scheduled to begin mass produciton of Mercedes-Benz commercial/passenger vans in mainland China at the end of 2005 at the earliest.

China Motor said that the commercial van venture in mainland China would be capitalized at 200 million euros in the initial stage and have an annual capacity of about 40,000 vans. The new venture is expected to become DaimlerChrysler AG's light passenger van manufacturing center in the Asia-Pacific region and its products can also be exported to Taiwan in the future.

According to Su, the van-production permission is the first of its kind granted to an international auto production venture in mainland China by the mainland's central government after its reshuffle in March this year.

For the commercial van venture, Su said, DaimlerChrysler and China Motor would first set up a holding company, the DaimlerChrysler Venture Hong Kong (DCVHK), in which the two parties respectively will hold a 67% and 33% stake. DCVHK and Fujian Motor Industry Group Co., a province-run automobile production conglomerate in mainland China, would set up the commercial van venture in Fujian Province, with both sides holding a 49% and 51% stake, respectively. So, Su said, China Motor would have a 16.17% stake in the scheduled van venture in mainland China.

Su claimed that China Motor is a "key minority" in the joint venture project with DaimlerChrysler and Fujian Motor. The president explained that DaimlerChrysler was very impressed with China Motor's achievements in Taiwan in the past 30 years and the company's superb performance in making its mainland China-based subsidiary, the South East Motor Corp., a great success. South East is a 50-50 auto production venture set up by China Motor and Fujian Motor in late 1995. Currently, South East has become a major commercial van and passenger sedan maker in the mainland by supplying several hot-selling models redesigned by China Motor from platforms developed by Mitsubishi of Japan.

Su said that China Motor would play a vital role in the Bnez commercial van venture, responsible for production plant design and construction, while parts procurement, auto production management and marketing/sales would also be handled by China Motor.

Su added that the new venture is an indicator for the increasingly close cooperation ties between China Motor and DaimlerChrysler and the two parties are expected to further extend their ties into other Mercedes-Benz products or markets.

Industry sources said that the new venture's production plant would be located in the Qingko Industry Zone in Fuzhou, Fujian Province. The initial annual production volume would be set at about 20,000 units and will then be gradually elevated to 40,000 units.

The new venture will first produce some Mercedes-Benz brand commercial van and multi-purpose van (MPV) models, including the confirmed Spinter and Vito Viano. Products made by the venture will be sold in the mainland and exported to South Korea, Hong Kong and other Southeast Asia nations in the future.

Su added that it has recommended many Taiwan-based auto parts suppliers in mainland China to DaimlerChrysler for the development of a supply chain system of the new venture.

In the future, Su claimed, South East will not rule out sharing the established repair and maintenance channels with the new venture, but the two companies' sales channels would be totally independent.

By concentrating on the upper market with each model sold for over 200,000 Renminbis, Su said that the new venture's products would not compete with that of South East but fill South East's vacancy in the high-level and –price segment in the mainland market.
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