Beijing Automotive Industry Holding is talking with Fujian Motor Industry Group to replace it as the local partner in a Daimler commercial vehicle JV with Daimler in southeast China, a source was quoted as saying on Tuesday.

Beijing Auto, which already makes Mercedes-Benz cars in another JV with Daimler in the country, wants to take the 50% stake held by Fujian Motor in its van manufacturing venture with the German automaker, a source, briefed on the matter, told Reuters.

Fujian Daimler Automotive, in which Daimler and China Motor hold a 34% and 16% stake, respectively, was established in June 2007, with an annual capacity of 40,000 units, and its factory, based in Fuzhou, will start making Vito and Viano vehicles later this year and the Sprinter in 2010.

Earlier this year, Daimler reached agreement with Beijing Auto’s subsidiary Beiqi Foton to make heavy-duty trucks, the report noted, adding that, if the deal with comes through, it could be the third vehicle manufacturing venture between the two partners.

Ulrich Walker, chairman and CEO of Daimler northeast Asia operations, declined to comment on the ongoing discussions between its two Chinese partners.

“What we need is a strong partner,” Walker said prior to the launch of the redesigned Mercedes-Benz E class sedan in Shanghai.

Local assembly will start in October with locally-made parts accounting for more than 40% of the total, said Daimler executives.

Mercedes-Benz sold 27,000 cars in China in the first half, up 50% year on year.

Walker declined to give a full year sales target but said he was optimistic about the second half as Beijing’s aggressive economic stimulus package had effectively bolstered consumer confidence.