DaimlerChrysler Seeks to Build Mercedes Luxury Cars in China
Asian Wall Street Journal; New York, N.Y.; Jan 9, 2003; By Neal E. Boudette;
Abstract:
The German-American company has begun talks with Chinese officials to begin assembling Mercedes C-Class and E-Class luxury cars in a joint venture with a local partner, people familiar with the matter said. The auto maker expects to have an agreement in place later this year, and hopes to set up a plant in which Chinese workers would build the vehicles from kits shipped from Germany, these people said. Eventually it expects to assemble 20,000 to 30,000 Mercedes cars a year in China, they said.
Last year, DaimlerChrysler sold 6,900 Mercedes cars in China -- most of them top-of-the-line S-Class sedans -- and 1,100 in Hong Kong. DaimlerChrysler's Mercedes unit will continue exporting S-Class models to China from Germany, people familiar with the matter said. It is also preparing to market its $320,000 Maybach super-luxury limousines in Hong Kong, and expects a good number of mainland customers.
Full Text:
Copyright Dow Jones & Company Inc Jan 9, 2003
DETROIT -- DaimlerChrysler AG is preparing to accelerate its push into China, joining the rush to grab a share of the world's fastest-growing auto market.
The German-American company has begun talks with Chinese officials to begin assembling Mercedes C-Class and E-Class luxury cars in a joint venture with a local partner, people familiar with the matter said. The auto maker expects to have an agreement in place later this year, and hopes to set up a plant in which Chinese workers would build the vehicles from kits shipped from Germany, these people said. Eventually it expects to assemble 20,000 to 30,000 Mercedes cars a year in China, they said.
Within the next few weeks, DaimlerChrysler also plans to name the head of its Australian operations to a new senior post, charged with expanding the activities of its Mercedes-Benz, Chrysler and Jeep brands in China, and coordinating strategy with alliance partner Mitsubishi Motors Corp., people familiar with the matter said.
The executive, Roman Fischer, 47 years old, who has spent two decades with DaimlerChrysler and has run its Australian and Pacific operations for the past two years, is expected to assume his new post on April 1 and will report to the company's management board in Stuttgart, Germany, they said.
A company spokesman, Toni Melfi, acknowledged the car maker is gearing up to expand in China. "This is the No. 1 priority in Asia," he said.
With a population of 1.3 billion, China is now the world's fourth-largest auto market after the U.S., Japan and Germany. Last year, car sales in China grew 55%, surpassing more than one million cars for the first time. Many car makers believe sales could top 3.5 million vehicles by 2005, making the China market larger than its German counterpart.
In the past several months, General Motors Corp., France's PSA Peugeot-Citroen SA, Ford Motor Co. and several other car makers have laid plans to invest millions of dollars in Chinese auto-assembly partnerships. For years, Chrysler has built Jeeps in a joint venture with the Beijing city government. The venture, Beijing Jeep Corp., started building the Grand Voyager minivan in September, and is supposed to start assembling Mitsubishi SUVs in 2004.
DaimlerChrysler's move signals another step in the market's development. While small, inexpensive cars make up the bulk of vehicle sales in China, an emerging class of wealthy private citizens is boosting demand for premium vehicles, and competition is mounting. Audi AG sold about 35,000 cars in China last year. Bayerische Motoren Werke AG is set to begin assembling 3-Series sedans in China in the fourth quarter.
Last year, DaimlerChrysler sold 6,900 Mercedes cars in China -- most of them top-of-the-line S-Class sedans -- and 1,100 in Hong Kong. DaimlerChrysler's Mercedes unit will continue exporting S-Class models to China from Germany, people familiar with the matter said. It is also preparing to market its $320,000 Maybach super-luxury limousines in Hong Kong, and expects a good number of mainland customers.
In terms of volume, Mitsubishi has the most ambitious plans. Through four different joint ventures, it sold about 80,000 vehicles in China last year, though not all under the Mitsubishi name.
Mitsubishi just signed deals to build its Lancer sedan through one joint venture and expects to build more than 40,000 this year, said Steven Torok, general manager for international car operations. Two other ventures are preparing to build Mitsubishi SUVs and compact minivans.
Volkswagen AG, which has built small cars in China for two decades, leads with 50% market share, although its lead is eroding. Four others -- GM, Honda Motor Co., Peugeot and Toyota Motor Corp. -- each have 5% to 10% of the market. |
