Move could help domestic vehicle firm develop own brands
The nation's fifth-largest vehicle producer BAIC Group is in talks with Daimler AG about taking a stake in the German automaker, media reports said on Tuesday, citing the chairman of BAIC.
Negotiations started in 2013 when the two sides signed a series of strategic agreements, and the talks are expected to finish before the end of this year, Xu Heyi, chairman of BAIC, was quoted as saying by news portal sina.com.cn.
Xu said that BAIC will be one of the major shareholders instead of a minor one, according to the report.
Neither company could be reached for comment by press time.
"Investing in Daimler will help BAIC accelerate the development of its proprietary brands in terms of technology," Wu Shuocheng, a Shanghai-based independent auto industry analyst, told the Global Times on Tuesday.
Wu noted that the potential deal is likely to be similar to the purchase of the Saab Automobile AB unit of General Motors (GM) in 2009.
"Just as BAIC paid for Saab's technology, the Chinese automaker will probably integrate Daimler's advanced technology and management systems to develop its own high-quality vehicles," Wu said.
After BAIC paid $200 million to buy Saab's technology, it purchased the platforms for the Saab 9-3 and 9-5 models, in addition to other tooling and powertrain technologies from GM, media reported in January 2011.
Acquiring foreign technology could help cut short the development time for BAIC's own-brand passenger vehicles by four to five years, according to the media reports.
The possible purchase of a stake in Daimler is also seen as part of a broader tie-up with the German automaker that could help BAIC expand its sales channels overseas, he noted.
However, Zhu Bin, a senior analyst at consultancy LMC Automotive, was less enthusiastic about the investment plan.
Though taking a stake could deepen the partnership between BAIC and Daimler, it is still uncertain that the German company will be open to sharing its advanced platforms with BAIC, Zhu told the Global Times on Tuesday.
"Daimler's investment in a BAIC stake in 2013 licensed the Chinese automaker to use the Mercedes-Benz E-Class, which was seen, however, as outdated platform in Germany," Zhu said, noting that obtaining non-core technologies would not help Chinese automakers develop proprietary brands.
In February 2013, Daimler and BAIC Group signed a binding agreement on Daimler's acquisition of a 12 percent stake in BAIC Motor, the passenger car unit of BAIC Group.
The agreement called for BAIC to increase its stake in the production joint venture Beijing Benz Automotive Co by 1 percentage point to 51 percent. Daimler also raised its stake in the integrated sales joint venture Beijing Mercedes-Benz Sales Service Co by 1 percentage point to 51 percent.
Xu said that the partnership between the two companies is in its "best phase ever" and Daimler's investment in BAIC Motor will do much to accelerate the development of its proprietary brands in terms of capital, technology, management and branding, according to a statement on Daimler's website in February 2013.
"Through this strategic investment in BAIC Motor, we will be the first non-Chinese manufacturer to take a stake in a Chinese OEM [original equipment manufacturer]," Bodo Uebber, CFO of Daimler, was quoted as saying in the statement.
