Beijing Rumors: BAIC And Benz?
There are rumors ricocheting around Beijing about a possible big tie-up between China’s BAIC and Daimler. BAIC is Daimler’s joint venture partner in China, where the joint venture handles Chinese production of the long version of the E-Class, the C-Class and the GLK.
According to the rumor, BAIC will take an interest in Daimler, whereupon Daimler will make a bigger investment into its Chinese JV. Two weeks ago, we reported that China’s sovereign wealth fund is zeroing in on buying a 4 to 10 percent stake in Daimler. The rumors say the deal might be bigger, but Chinese rumors are to be eaten with a big helping of salt MSG.
Daimler needs a new investment partner after Abu Dhabi’s sovereign wealth fund Aabar had sold its remaining 3.07 percent stake in Daimler. Mercedes could also use a lift of its fortunes in China. Sales of the “Benzes” as they are called in China are dwarfed by the competition of Audi and BMW, which really hurts Stuttgart’s pride.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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Would this be a prelude to the Chinese partner producing Benzes for Asian export? I would expect Chinese produced western luxury marques to have better penetration (and profit margins) in the export market than highly suspect native Chinese econo cars.
I thought the same when Brilliance Automotive started manufacturing the 3-series in its joint venture with BMW a few years ago, but export doesn't seem to be a main priority. I am told by a friend who recently purchased a 3-series in South Korea that that the car was made in South Africa. It appears that all the BMW sold in that country are either German or SA in origin. This is odd given that China is practically right next door. As with the A6, it appears that Chinese manufacturing for the high end German marques is destined mainly for the still strong domestic market. I imagine Mercedes will follow a similar model. I guess the true test is what happens when Chinese demands dry up, or reaches saturation point.