AutoBeta(AutoBeta.net)12/13 Report--

On December 13, BAIC announced that in order to strengthen long-term strategic cooperation between the two sides, it had held a 9.98% stake in Daimler AG through continued investment in 2019. This shows that the two sides fully recognize the success of long-term cooperation in the past and attach importance to future development. At the same time, Daimler Group holds 9.55% of Beijing Automobile and 2.46% of BAIC Blue Valley, and cross-shareholdings will contribute to the high-quality development and long-term success of both sides in the Chinese market. BAIC has no plans to further increase its stake in Daimler under an agreement between the two sides.

Beijing Automobile has a long history with Daimler. Since 2003, Daimler and BAIC have established a long-term strategic partnership. Since then, the two sides established a joint venture Beijing Mercedes-Benz Automobile Co., Ltd. in 2005, and the two sides jointly sold cars through Beijing Mercedes-Benz sales and Service Co., Ltd. In 2012, BAIC Foton Motor Co., Ltd., controlled by BAIC, formed a joint venture with Daimler to produce medium and heavy trucks.

As early as 2013, BAIC and Daimler proposed a cross-shareholding plan, also known as "Beidaihe" cooperation, and agreed that BAIC would also buy a stake in Daimler after Daimler took a stake in BAIC. In 2013, Daimler bought Beijing Automobile, a Hong Kong-listed company owned by BAIC, and has since become a member of Beijing Automobile's board of directors, with a current stake of 9.55%. In 2018, Beijing Mercedes-Benz acquired a BAIC plant in Shunyi, Beijing. In the same year, Daimler acquired a stake in Beijing New Energy Automobile Co., Ltd., a subsidiary of BAIC, and currently owns 2.46%.

On July 23, 2019, BAIC announced that in order to strengthen the long-term strategic cooperation between the two sides, it would invest in Daimler AG, which currently owns 5% of Daimler AG. The deal includes 2.48 per cent direct shareholding and the right to obtain additional voting rights equivalent to 2.52 per cent of the shares.

It is worth mentioning that Chinese carmaker Geely Motor owns 9.69% of Daimler. In February 2018, Geely Group Co., Ltd. announced that it would acquire 9.69% of Daimler AG through its overseas enterprises, making it Daimler's largest shareholder, followed by the introduction of smart's domestic projects. After Geely became a major shareholder in Daimler, in March 2019, the two sides announced a joint venture in China, each with a 50% stake, to jointly operate and promote the transformation of the Smart brand around the world, turning smart into an electric smart car brand, which will be produced in a new factory in China and is expected to be put on the market and sold globally in 2022. As a result, BAIC increased its stake in Daimler to 9.98%. Through this increase, BAIC directly overtook Geely to become Daimler's largest shareholder.

Some analysts believe that BAIC strongly surpasses Geely's shareholding to lock it into Daimler's most senior partner in the Chinese market. Data show that Beijing Automobile is one of the five major automobile groups in China, mainly engaged in passenger car R & D and manufacturing, spare parts manufacturing, automobile service trade, R & D, education, investment and financing and other business. among them, the passenger car business is carried out through Beijing Mercedes-Benz, Beijing Hyundai, Fujian Mercedes-Benz and Beijing brands.

Beijing Mercedes-Benz is the main source of profit for BAIC and can be called a "profit cow". According to Beijing Automobile's semi-annual report, total revenue in the first half of the year was 90.375 billion yuan, up 16.08 percent from the same period last year, while net profit was 2.758 billion yuan, up 163.5 percent from the same period last year. Although the figures look bright, there is a little sadness behind the double growth, because 88.059 billion yuan of the 90.375 billion comes from Beijing Mercedes-Benz, accounting for 97.4%, while the revenue related to BAIC's own brand is only 2.316 billion yuan.

In terms of sales, the Beijing brand sold only 28000 vehicles, down about 20% from the same period last year, while Beijing Mercedes-Benz sold 316000 vehicles in the first half, up 17.0% from the same period last year. Combined with Beijing Mercedes-Benz gross profit of 23.821 billion yuan, the gross profit of a single car is as high as 75383 yuan.

As Mercedes-Benz performed well in the domestic market, when BAIC tried to expand its share ratio in Daimler, Daimler also repeatedly put forward plans for its shareholding in a joint venture with BAIC, increasing its shareholding from 49% to no less than 65%, but it was opposed by BAIC, and Daimler has yet to achieve this goal.

In view of the lifting of foreign equity ratio restrictions on passenger cars and the restriction of no more than two joint ventures in 2022, foreign brands are seeking to increase their shareholding in the joint venture and regain control. As the world's largest car market and new energy vehicle market, Daimler must want to take more shares, because as the controlling stock ratio expands, the more controlling shares will mean a corresponding increase in profits. However, if Daimler gets more control, it will not be a good thing for BAIC, because the development of BAIC's own brand is not smooth, and the reduction of the holding ratio means a decline in its profits. that is why BAIC has consistently opposed Daimler's increased stake in the joint venture.

BAIC said that Daimler is one of the most important strategic partners of BAIC in the world, and the partnership between BAIC and Daimler has always been a model of Sino-German cooperation. it has played an important role in promoting industrial cooperation, technological innovation and even the healthy economic and social development of the two countries. By the end of 2021, Mercedes-Benz will join four pure electric models in Huagong, including EQA, EQB, EQC and EQS. Among them, EQA, EQB and EQC have been put into production in China, and the new EQE will also be made in China next year.

Welcome to subscribe to the WeChat public account "Automotive Industry Focus" to get the first-hand insider information on the automotive industry and talk about things in the automotive circle. Welcome to break the news! WeChat ID autoWechat