GENEVA - German automaker Daimler AG sees opportunity in China's 12th Five-Year Plan (2011-2015) and intends to invest 3 billion euros (nearly $4.2 billion) to leap forward in the Chinese auto market.

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"We expect China's economic growth to maintain high speed in the coming years, resulting in more people being able to afford cars, especially luxury cars," CEO Dieter Zetsche said.

The investment over five years is Daimler's largest in an overseas market and at least triple what it has put into China so far, the company said. In return, Daimler aims to sell 300,000 cars annually in China by the end of 2015.

"And by then, we hope to change the ratio of our locally produced products and imported products in China from the current 3:7 to 7:3," Zetsche said. "Thus, to achieve our target of having 200,000 cars made in China, we will invest heavily to expand our production capability in our joint ventures here."

Chinese authorities recently granted a business license to Shenzhen BYD Daimler New Technology Co Ltd - his company's joint venture with Chinese battery and automaker BYD Co - and it took no more than a year after the two sides signed the venture agreement last March, Zetsche told China Daily last week.

The 600 million-yuan venture will develop electric vehicles, capitalizing on Daimler's know-how in electric vehicle architecture and safety and on BYD's strengths in battery technology and e-drive systems, their agreement said. The vehicle will be marketed under a new brand jointly created and owned by Daimler and BYD.

"And we are also planning to use part of the 3 billion euros to expand the production capacity in Beijing Benz Automotive Co Ltd (BBAC), the passenger car joint venture with BAIC Motor, Fujian Daimler Automotive Ltd for vans, and Foton-Daimler for trucks," Zetsche said.

"Our 200 million-euro engine plant, which will produce four-cylinder gasoline engines for all Daimler products in China, will also be operational by 2013." He said the plant's initial capacity will be 100,000 units annually.

Zetsche also confirmed that Daimler is considering adding a third model, beyond C- and E-Class cars, for production at BBAC. "But it takes time to make the final decision."

Zetsche also said the company will invest heavily to establish research and development facilities in China.

Joachim Schmidt, head of sales and marketing for Mercedes-Benz Cars, said the company's success in 2015 would make China its biggest market. He said he expects sales in 2011 to grow by double digits, following more-than-doubled growth in 2010.

China Daily

(China Daily 03/07/2011 page7)