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DaimlerChrysler to make Mercedes vans in China

DaimlerChrysler AG, the first foreign carmaker to invest in China, plans to spend up to 160 million euros (US$195 million) with two partners to build Mercedes-Benz vans in the country, expanding in Asia's second-largest economy.

DaimlerChrysler, the world's fifth-largest carmaker, plans to build Mercedes-Benz Sprinter and Viano vans in southeastern China's Fuzhou city with Fujian Motor Industry Group and Taiwan's China Motor Corp (中華汽車), said the Taiwanese carmaker's spokesman Hsu Li-min (許利民), in an interview in Taipei.

China, the world's third-biggest vehicles market after the US and Japan, is the mainstay of DaimlerChrysler's strategy in the region, after its decision this year to pare investments in South Korea and Japan.

Chief executive officer Juergen Schrempp had wanted Asia to add to a quarter of the Stuttgart, Germany-based carmaker's sales by 2010. DaimlerChrysler makes Jeep Cherokee and Mitsubishi Pajero sport-utility vehicles in Beijing and will expand to making luxury cars and trucks.

Production of the vans may begin as early as 2006, "pending the Chinese authorities' study, which is expected to be completed in time" for breaking ground on the 40,000-vehicle a year factory in early next year, Hsu said.

Fujian Auto, owned and run by the government of southern China's Fujian Province, will own half of the venture, while DaimlerChrysler will own a one-third stake, Hsu said.

China Motor, which makes Mitsubishi Motor Corp's vehicles in Taiwan, will own the remaining stake and be responsible for building and running the Fuzhou plant, Hsu said.

"Increasing our manufacturing presence in China is a key part of our Asia strategy and further complements our passenger car and commercial vehicle activities in the Chinese market," said DaimlerChrysler's Beijing-based spokesman Trevor Hale.

China Motor is part of the Yulon Group (裕隆集團), with businesses from textiles to construction and trading, including owning Yulon Motor Co (裕隆汽車), which assembles and sells cars for Nissan Motor Co in Taiwan.

"DaimlerChrysler wants to tap our experience in managing car manufacturing plants in China," Hsu said. "Our experience in working with the Fujian government plays an important role."

China Motor owns a stake in Southeast Motor Co (東南汽車), a venture with the Fujian government that makes Mitsubishi Motors' Lancer compact cars and sells them as Southeast Lioncel.
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