DaimlerChrysler to buy stake in China's Foton

[TiburonJT]

SHANGHAI, Nov 30, 2006; Reuters reported that DaimlerChrysler will buy 24 percent of Chinese truck and pickup makerBeiqi Foton Motor Co. for 817 million yuan ($104 million), the Chinese company said on Thursday.

Beiqi Foton posted a net loss of 45.91 million yuan on sales of 9.79 billion yuan in the first half of this year. Sales were up 17 percent from a year earlier.

China's commercial vehicle market is expected to sustain double-digit growth in coming years while exports expand, consultancy KPMG said recently, despite shrinking in 2005 when Beijing imposed controls on construction and investment.

About 2.5 million commercial vehicles were sold in China in 2005, down slightly from 2.6 million in 2004. But in the first half of 2006, sales amounted to 1.5 million, on track to surpass last year's total.

Source: http://www.theautochannel.com/news/2...30/030232.html

[likearock00]

GM and Ford take out loans and close plants to stabilize. Chrysler goes on a shopping spree. Oh well, daddy Mercedes will keep the lights on and the checks from bouncing!!

[JVal14]

Originally Posted by likearock00

GM and Ford take out loans and close plants to stabilize. Chrysler goes on a shopping spree. Oh well, daddy Mercedes will keep the lights on and the checks from bouncing!!

Well Daimler Chrysler is essentially run by the Mercedes people, so this is probably their decision. still, don't they have enough problems without trying to turn a money losing company profitable in a communist nation?

[AndrewGS]

So there's a Chinese company that rehashed the Proton name?! Must be a high-quality automobile.

[nadepalma]

I wonder how the Chinese government likes this? Right now the way things are, they're kinda leary about outside ownership or stakes in their companies (probbaly why GM hasn't take out a stake in SAIC since they build everything in China with them, etc).

[GM-10]

Originally Posted by JVal14

Well Daimler Chrysler is essentially run by the Mercedes people, so this is probably their decision. still, don't they have enough problems without trying to turn a money losing company profitable in a communist nation?

Is it really that simple?

For example, can DCX afford not to grow in China?

Do we have any clue why Foton is losing money?

Could it be that DCX has 'off the shelf' solutions for Fotons problems?

Remember, Daewoo was completely in the Toilet when GM bought the pieces and fixed it. Just a few years later Daewoo was just about the brightest star in the GM constellation.

I guess my point is that without a more substantial details its really hard to say whether or not this purchase is a good idea.

[69Firebird400]

Nobody has mentioned what my guess is for the reason behind this - Chrysler has been on record as saying that they were considering a Chinese partner so they could produce the Hornet subcompact and sell it for a low price profitably. I'd be surprised if the Hornet wasn't somehow behind this. $100 million is pocket change to get production capacity in China.

If that is the case, it will be interesting to see how much political backlash DCX has to endure for bringing a Chinese-built car to the U.S. market.

[rhvfd10]

Well, that's one less Chinese automaker that will be violating copyrights.

[01cavalier]

It might be their best way to get into the Chinese market fast. Who knows, this could end up paying off for them after a few years like GM buying Daewoo.

[Geotpf]

Originally Posted by nadepalma

I wonder how the Chinese government likes this? Right now the way things are, they're kinda leary about outside ownership or stakes in their companies (probbaly why GM hasn't take out a stake in SAIC since they build everything in China with them, etc).

The Chinese goverment allows, and even encourages, foreign companies to take minority stakes in Chinese automakers, although owning more than 49% is banned. This is less than that, so I'm sure they have no problem.

[1931Chevy]

Do the Chinese Goverment allow that two outside companies buy one Chinese company together, lets say GM and Ford do a little alliance and each one buy a 40 percent of one chinese automaker do they allow that

[gwwyjjliu]

I've seen Foton's pickup trucks...absolute garbage based on 30-year old technology, just like all of the other pickups sold in China. Maybe DC wants to bring the Dakota to China. If so, it would revolutionize the pickup market like the Buick Regal revolutionized China's premium sedan market back in 1999.

[JVal14]

Originally Posted by GM-10

Is it really that simple?

For example, can DCX afford not to grow in China?

Do we have any clue why Foton is losing money?

Could it be that DCX has 'off the shelf' solutions for Fotons problems?

Remember, Daewoo was completely in the Toilet when GM bought the pieces and fixed it. Just a few years later Daewoo was just about the brightest star in the GM constellation.

I guess my point is that without a more substantial details its really hard to say whether or not this purchase is a good idea.

No it's not that simple. I'm merely raising the question given the information that is offered. That's a good point about GM and Daewoo, but I would say that GM was in a better position now than DCX is in right now. And Daewoo's infrastructure was in capitalist South Korea; things are more comlicated in China, even though they have become more capitalistic.

If want to grow in China, I say good for them because it's probably necessary; but it was also necessary that Hitler eliminate Russia as a threat, and the German invasion essentially lost WWII for them. The problem was they took on too much at once. That seems like an odd parallel to draw, but it's true.

[paul8488]

So they were looking for a companion to make small cars with... and they pick a truck and pickup maker. Geez. Sheer brilliance.

[TiburonJT]

Originally Posted by paul8488

So they were looking for a companion to make small cars with... and they pick a truck and pickup maker. Geez. Sheer brilliance.

Maybe they could make some small SUVs or crossovers for DCX. Clearly DCX doesn't have enough of those yet.