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Foton-Daimler JV to target medium-end truck market

Foton-Daimler, a 50:50 joint venture between Beiqi-Foton Motor Co. (Foton) and Daimler AG, is expected to start production in 2011, according to Gerrit Marx, president and CEO of Daimler Trucks China. Marx revealed these plans at CBU/CAR’s 2010 Heavy-Duty Seminar in Beijing.

As the first step towards global strategic collaboration between Foton, the world’s largest commercial vehicle manufacturer by sales, and Daimler, the world’s largest medium and heavy-duty truck (MHDT) maker, the Beijing-based new joint venture will face the world market by offering a new generation of Foton’s Auman heavy-duty truck powered by Mercedes-Benz OM457 diesel engines, which will be locally produced in the future, said Marx.

Targeting the mixed truck segment between high-end premium and low-end trucks, the new Auman truck will be produced in 2011 at Foton Auman’s second plant, which is now under construction.

The jointly produced Auman will bear Foton’s badge and will be labeled “Powered by Mercedes-Benz,” said Marx.

Wu Yuejun, vice president of Foton as well as head of Auman Division, echoed Marx’s remarks at the same panel.

According to Wu, Daimler truck will mainly target premium brand in Tier-1 markets, which usually include North America, Western Europe, Japan, Korea and Australia, while Foton Auman, as a middle and low-end brand, will aim at Tier-2 markets, emerging markets like Russia, South Asia, Africa and Latin America.

In Wu’s opinion, the product mix of high-end Daimler truck and low-end Auman truck will strengthen the global competitiveness of both Daimler and Foton. Furthermore, the advanced technology, management knowhow and global sales networks from Daimler, plus low-cost operational ability and rich experience of Foton, will build Auman into a worldwide famous heavy-duty truck brand.

With strong support from Foton-Daimler JV, Foton is to become the world’s largest MHDT manufacturer by 2020, with expected sales of 280,000-350,000 units, realizing a revenue of ¥50-¥75 billion and profit margin of ¥5-¥6 billion, said Wu.

Wu also said at the seminar that Foton is setting up three production bases in Brazil, India and Russia, each having a 20,000-unit output capacity. With those overseas bases, Foton plans to boost its exports to 30 percent of its vehicle sales by 2015, up from 8 percent this year.

With a registered capital of ¥6.35 billion, the new Sino-German JV will have an annual production capacity of 100,000 heavy-duty trucks and 45,000 heavy diesel engines.

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