Center

Company buys into truck maker

By Gong Zhengzheng (China Daily)
Updated: 2006-12-01 09:03

Asked how its truck venture plan with Foton will go, Trevor Hale, the spokesman for DaimlerChrysler (China) Investment Co Ltd, told China Daily: "We have been in discussions with Foton for quite some time to co-operate to offer medium-to-heavy-duty trucks in China. Until the approval process is complete, we can't comment further."

It has been reported that DaimlerChrysler will pull out of the bus venture in Yangzhou to make room for its planned truck venture with Foton.

Hale said the German-US group continues to work with Yangzhou Yaxing to seek ways to "optimise our business together."

"DaimlerChrysler is committed to the city of Yangzhou and is considering additional projects there," he added, without elaborating.

The bus venture in Yangzhou has been in the red for years due to sluggish sales.

Yale Zhang, director of emerging-markets vehicle forecasts for auto consultancy CSM Asia in Shanghai, yesterday said DaimlerChrysler would have to withdraw from the bus venture if it still wanted to form a truck venture with Foton as China's auto industry is unlikely to change any time soon.

Jia Xinguang, an independent auto industry commentator in Beijing, said DaimlerChrysler is likely to pull out of the bus venture in Yangzhou which has so far been valueless.

Jia cited Italian commercial vehicle maker Iveco's withdrawal from a loss-making bus venture earlier this year in Jiangsu Province with a local firm in a bid to form a truck venture with Shanghai Automotive Industry Corp China's biggest auto group in line with industry policy. Iveco also runs a light-duty truck venture in Jiangsu with another local partner.

"But DaimlerChrysler will possibly co-operate with Yangzhou Yaxing in engines or spare parts as a compensation for the latter," Jia said.

Other global truck makers, such as Sweden's Volvo and France's Renault, are also investing heavily in China to cash in on booming truck demand boosted by the nation's rapid economic growth and growing construction sector.

Foton said it will spend the money from its latest share issue, upgrading its products and assembly lines, paying back bank loans and replenishing its cash flow.

The company's sales grew by 7.8 per cent year-on-year to 181,000 vehicles in the first half of this year, including 173,000 trucks.