Daimler And BAIC Are Doing It

Bertel Schmitt
by Bertel Schmitt
daimler and baic are doing it

It was one of the worst-kept secrets: Two weeks ago, Reuters reporters had picked up the scent of Daimler planning a big investment into China’s BAIC. This week, rumors started flying around in Beijing that it is true. Today, Daimler announces, as expected, that “Daimler AG is going to invest in BAIC Motor, the passenger car unit of BAIC Group, one of the leading automotive companies in China.”

Group grope

Daimler is taking a 12 percent stake in BAIC Motor and gets two two seats on the Board of Directors of BAIC Motor. Also as suspected, 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 stroke of a pen, the Beijing Benz JV and its full profits appear on the books of BAIC, thereby multiplying the value of the stock. At the same time, and taking a page out of GM’s golden share playbook,”Daimler will increase its stake in the integrated sales joint venture Beijing Mercedes-Benz Sales Service Co. by 1% to 51%.”

Daimler will pay 640 million euros ($869 million) for its stake in BAIC Motor, an investment that most likely will come back in spades once BAIC Motors is listed. “We will be the first non-Chinese manufacturer to take a stake in a Chinese OEM,” finance chief Bodo Uebber told Reuters.

Not exactly, says Reuters, noting that “in 2009, German truckmaker MAN acquired a blocking minority in Chinese peer Sinotruk.”

PS: Having hurt enough feelings already, we steer clear of the traditional tie-up pictures, and show images of a man with a huge stach and scenes of heavy petting instead.

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3 of 12 comments
  • Geozinger Geozinger on Feb 01, 2013

    Hmm. German company ties up with Chinese company. No overtones of looming pilfering of Western company's IP or implications that this will somehow be bad for the home market. I can't wait to see the first Chinese-built Audis and Benzes that make it here (to North America)... It'll happen.

    • Corntrollio Corntrollio on Feb 01, 2013

      "I can’t wait to see the first Chinese-built Audis and Benzes that make it here (to North America)…" They aren't always the same models and they do make unique changes for China. For example, you can get an A4L and an A6L in China, but not here. Audi was selling the Audi 100 in China as the Audi 200, even after the A6 had come out in the West, and they didn't have the A6 until at least 5-6 years after it had been out here. The long-wheelbase is partly because a lot of them are chauffeur-driven and partly because of the rough roads. Also, I believe the chassis has some changes unique to China because of the rough roads. Chauffeur-driving also necessitates interior changes -- for example, an E-Class Benz in India will generally have 4-zone climate control, which I believe is or was S-Class-only here. Audi also has different changes for South America, South Africa, Malaysia, etc. You can see codes here: http://www.laneholloway.com/wp-content/uploads/2009/05/PAG_PR_OptionsCodes.pdf I know Audi also makes cars in India -- same vehicles, A4, A6, and Q5. The new factory in China will make the A3 I believe.

  • Wheeler Wheeler on Jul 02, 2013

    Note that the biggest grins are on the faces of the Chinese participants...,out of nervous embarrassment no doubt. Smiling was never the norm in traditional photos, and touching among men was also traditionally just not done. As for the now common hand-shaking, that was a conciliatory gesture to the barbarian intruders.

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