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On December 13, BAIC Group announced that in order to strengthen the long-term strategic cooperation between the two sides, it has held 9.98% of Daimler AG in 2019 through continued investment. 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 the shares of BAIC Motor and 2.46% of the shares of Beiqi Blue Valley, and the cross-shareholding will help the high-quality development and long-term success of the Chinese market. BAIC Group said that according to the agreement, BAIC Group has no plans to further increase its holdings in Daimler Group shares.
BAIC Motor has a long history with Daimler, and since 2003, a long-term strategic partnership has been established between Daimler and BAIC Group. Since then, the two sides established a joint venture Beijing Benz Automobile Co., Ltd. in 2005, and the two parties jointly sell cars through Beijing Mercedes-Benz Sales Service Co., Ltd. In 2012, BEIQI Foton Motor Co., Ltd., which is controlled by BAIC Group, and Daimler established a joint venture to produce medium- and heavy-duty trucks.
In 2013, BAIC Group and Daimler proposed a plan for cross-shareholding between the two sides, which is also known as the cooperation of "Beidaihe", and agreed that after Daimler holds the shares of BAIC, BAIC will also take a stake in Daimler. In 2013, Daimler invested in the acquisition of BAIC Motor, a Hong Kong-listed company under the BAIC Group, and has since become a member of the board of directors of BAIC Motor, with a current shareholding ratio of 9.55%. In 2018, Beijing Benz acquired a plant of BAIC Group in Shunyi, Beijing. In the same year, Daimler acquired part of the shares of Beijing New Energy Automobile Co., Ltd., a subsidiary of BAIC Group, and Daimler currently holds 2.46% of the shares.
On July 23, 2019, BAIC Group announced that in order to strengthen the long-term strategic cooperation between the two parties, it will invest in Daimler AG and hold a 5% stake in Daimler AG. The transaction consisted of a direct shareholding of 2.48% and the right to obtain an additional equivalent to 2.52% of the shares. With this investment in Daimler, BAIC Group became the third largest shareholder of Daimler, and at that time, Daimler's largest shareholder was Geely Automobile, holding 9.69% of the shares.
In February 2018, Geely Group announced that it had acquired 9.69% of Daimler AG through its overseas corporate entities, becoming the largest shareholder of Daimler in one fell swoop. After becoming the majority shareholder of Daimler, Geely announced in March 2019 that it will establish a joint venture in China, each holding 50% of the shares, to jointly operate and promote the transformation of the SMART brand on a global scale, build smart into an electric smart car brand, and produce it in a new factory in China, which is expected to start on the market and sell globally in 2022.
Geely has always been the largest shareholder of Daimler, and after BAIC became the third shareholder of Daimler in 2019, the market has also repeatedly reported that BAIC has raised its shares in Daimler to 10%, surpassing Geely to become Daimler's largest shareholder. Some analysts believe that BAIC strongly surpasses Geely's shareholding and is locking in to become Daimler's most senior partner in the Chinese market.
At that time, neither BAIC nor Daimler publicly responded to the matter. After two years, BAIC quietly increased its daimler shares to 9.98%, and through this increase, BAIC also surpassed Geely to become Daimler's largest shareholder.
According to the data, BAIC Motor is one of the five major automobile groups in China, mainly engaged in passenger car research and development and manufacturing, parts manufacturing, automobile service trade, research and development, education and investment and financing, among which the passenger car business is carried out through Beijing Benz, Beijing Hyundai, Fujian Benz and Beijing brands.
BAIC's constant desire to expand its shareholder ownership of Daimler is also related to the performance of its brand Mercedes-Benz in the Chinese market. According to the 2020 luxury brand sales list, Mercedes-Benz's cumulative sales in the whole year were 774,382 vehicles, an increase of 11.7% year-on-year, although it was not as good as BMW, but the total amount was not much different from BMW, and even the growth rate was higher than BMW.
Of course, the increase in shareholding ratio may be based on the position of Beijing Benz in BAIC Group, and at present, Beijing Benz is the main source of profit for BAIC Group, which can be called "profit cow". According to the semi-annual report of BEIJING Motor, the total revenue in the first half of the year was 90.375 billion yuan, an increase of 16.08% year-on-year, and the net profit was 2.758 billion yuan, an increase of 163.5% year-on-year. Although the data looks very eye-catching, behind the double growth is slightly sad, because 88.059 billion yuan of these 90.375 billion yuan come from Beijing Benz, a proportion of 97.4%, while the revenue related to BAIC's own brands is only 2.316 billion yuan.
In terms of sales, the sales volume of the Beijing brand was only 28,000 units, down about 20% year-on-year; Beijing Benz's sales in the first half of the year reached 316,000 units, an increase of 17.0% year-on-year. Combined with the gross profit of Beijing Benz of 23.821 billion yuan, the gross profit of its single car is as high as 75383 yuan.
Due to Mercedes-Benz's good performance in the domestic market, when BAIC Group tried to expand its shareholding ratio in Daimler, Daimler also proposed its shareholding ratio in the joint venture with BAIC on many occasions, increasing the shareholding ratio from 49% to no less than 65%, but it was opposed by BAIC internally, and Daimler has not yet completed this goal.
However, in view of China's abolition of the foreign ownership limit for passenger cars in 2022 and the restriction on no more than two joint ventures, the brand's foreign party intends to seek to increase the shareholding ratio of the joint venture company and regain control. As the world's largest automotive market and new energy vehicle market, Daimler definitely wants to take more equity, because the more equity it holds, the corresponding profit will increase significantly. However, if Daimler gets more equity, it is not a good thing for BAIC, because the development of BAIC's own brand is not smooth, and the reduction of the holding ratio means that its profits have declined, which is why BAIC has continued to oppose Daimler's increase in shareholding in the joint venture.
At present, the development of BAIC Group is not very optimistic, it basically relies on Beijing Benz to maintain, the development of independent brands is very sluggish, including Beijing brands and BAIC New Energy are the same, if BAIC Group continues to deepen the status of the joint venture brand, ignoring the development of its own own brands, will it become the next Brilliance Group?
BAIC Group said that Daimler Group is one of the most important strategic partners of BAIC Group in the world, and the partnership between BAIC Group and Daimler Group has always been a model of Sino-German cooperation, which has played an important role in promoting industrial cooperation, technological innovation and even the healthy development of economy and society between the two countries. By the end of 2021, Mercedes-Benz will introduce a total of four pure electric models in China, including EQA, EQB, EQC and EQS, of which EQA (365,800 yuan), EQB (437,800 yuan) and EQC (49.98-57.98 million yuan) have been put into production in China, and the new EQE will also be produced next year.
Source: Automotive Industry Concerns