New Cooperation New Map - "Landmarking" Event in Commercial Vehicle Industry

China's commercial vehicle industry "landmark" incident, entrenched in the world's leading position in commercial vehicles for many years, Daimler finally with the current China's largest production and sales of commercial vehicle companies - Foton Motor in Beijing signed the "Letter of Cooperation." Although this “engagement” ceremony will take time to formally enter the “marriage” hall, it is a sign that the cooperation between the two parties has reached a critical stage. It is also a new attempt by multinational commercial vehicle companies to change their cooperation model in China.

The two sides agreed that the joint-stock company's peer-to-peer ratio would be the same as that of other car joint ventures, but the future joint venture's product structure should be locked in the Auman heavy truck product under the Futian brand and the Daimler heavy-duty engine, without explicitly deciding on Daimler’s Heavy truck type, unusual. This shows that this is a different concept from the traditional joint venture model. It is also a clear and pragmatic portrait of both sides of the current commercial vehicle market in China.

In the past, traditional joint ventures and cooperation were based on the introduction of foreign mature models, manufacturing processes, part of product technologies, and management processes. The product outlets were all domestic demand. The cooperation framework between Daimler and Foton Motors has taken a new step. It involves the joint sales of local branded products through Daimler's sales system for overseas sales. At the same time, the future domestically produced Daimler heavy-duty trucks can be equipped to Europe. At the Manchurian Heavy Trucks Co., Ltd., to enhance the competitiveness of the domestic high-end heavy truck market, it is possible to realize the complementarity and benefit-sharing of the joint venture partners in both the domestic and foreign markets. This is an evolution of the improvement of the traditional joint venture model, and it is also the response of the Chinese and foreign parties in the evolution of the industry and the market. The wise choice for new challenges.

Daimler, a company that has long been a leader in the global commercial vehicle market, has adopted a new, pragmatic and flexible cooperation model in China. This reflects Daimler's careful conclusion of its experience in years of operation in the Chinese automotive market and its commercialization in China. The car market has taken a valuable strategic turn. The history of Daimler's entry into China's commercial vehicle industry is almost the same as that of Volkswagen's entry into China's passenger vehicle industry. Both of them are acting as industry pioneers. In the late 1980s, the country changed the “absence” of the automobile industry, created a domestic heavy-duty vehicle brand, implemented a “high starting point, high standards, and high quality” strategic decision, and introduced a full set of German Mercedes-Benz licenses and heavy-duty vehicle production technologies to build Baotou North Mercedes-Benz’s key projects have established a joint venture between Daimler and Yangzhou Yaxing in the 1990’s. Although Daimler is a pioneer in the field of commercial vehicles in China, the timing of “check-in” is one big step ahead of its rivals. However, the outcome is always at a disadvantage, and it is missed as the leading position among Chinese foreign-funded enterprises. It was precisely because Daimler took a relatively long detour in China and paid the "tuition fee" for the market to run in. This new cooperation with Foton revealed an innovative vision.

The position of Foton Motor in the commercial vehicle industry in China is very similar to that of Chery Automobile in the passenger vehicle industry, all of which are represented by the fast-growing “dark horse” image. At present, although Foton Motor ranks first among domestic counterparts in terms of production and sales volume and realizes the goal of “bigger” in the first step, there is still a long way to go from the second step to “strengthening” the goal, obviously to be in the product structure and market structure. The adjustment to take a new step, Foton Motor can maintain impulse performance in light vehicles, like the QQ micro-car contribution to Chery's production and sales, but the role of the company's output value and profit promotion meager. Therefore, Foton Motors must have a breakthrough in heavy-duty vehicles on the basis of continuing to maintain the scale of light-duty vehicles and appropriately maintaining the scale of medium-sized vehicles. After all, the first camp of the heavy truck market is currently in the hands of FAW Group, Dongfeng Corporation, and CNHTC Group. In the second camp, Foton Motors also faces lateral restrictions such as Shaanxi Automobile and SAIC Hongyan.

In recent years, Foton has been making every effort to build the heavy truck Auman brand, integrating more domestic and foreign resources on the powertrain system, and forming alliances with Weichai Power, AVL, and Cummins Power. If we want to continue to raise the Auman brand to the high end Continuously shortening the distance between the first camp and the production and sales, and close to the brand gap between Iveco and Volvo, it still needs the help of “foreign aid”. The Mercedes-Benz heavy truck model technology and power resources can play an important role. And Auman has been implanted with more Mercedes-Benz heavy truck technology content, and it is extremely beneficial to identify with customers who want to get overseas markets as soon as possible. In addition, Foton Motor, which has inhaled Mercedes-Benz technology's vitality, has received intangible and indirect benefits in the promotion of its entire product range.

For Daimler, experience has shown that the time to import a Mercedes-Benz heavy-duty vehicle or introduce a Mercedes-Benz model for domestic use seems immature. Benefits in the Chinese market can still be benefited from the domestic Mercedes-Benz heavy truck engine and model technology transfer, and the benefits of the two domestic and foreign markets can also be shared through the original local brand products of the joint venture partners. Mercedes-Benz commercial vehicle series products are generally of high quality and high price, and it is difficult to apply to the purchasing power of general users in developing countries like China. Daimler would like to expand its borders beyond the traditional markets of Europe and America. , borrowing partners’ product resources as a supplement is a flexible market strategy. In this regard, we have already seen that the Renault-Nissan Alliance is proceeding to use the Dongfeng Nissan Joint Venture's Dongfeng Commercial Vehicle product resources for international market development. Iveco Joint SAIC Motor Co., Ltd. promotes Iveco, Yuejin, and Hongyan commercial vehicle brands. General Motors is also borrowing SAIC-GM-Wuling’s micro-vehicle product resources for overseas markets.

With the development of the market and the intensification of competition, we have seen a new round of Sino-foreign joint ventures between vehicle companies that have already broken through the traditional model, that is, using foreign brands and models to target a single domestic market, and instead begin to try. Chinese and foreign two brand products are stratified and expanded in both domestic and foreign markets, achieving mutual co-operation and mutual benefit in cooperation. This is also a new round of more equitable and mutually beneficial joint venture mode that can only be achieved through constant improvement of the reform and opening up environment and the ability of local companies to achieve self-strengthening and achieve a certain scale of strength. Chinese enterprises can thus further develop, move into the international market, establish the position of local brands in the global market, and multinational companies can also win more opportunities in the Chinese market.

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