DaimlerChrysler and Beijing Automotive Industry (Group) Company (BAIC) today announced details of a 30-year agreement for their joint venture company in China, Beijing Jeep Corporation (BJC). The agreement is pending final Government ratification (which should be a formality).
Earlier this week media reports in The Philippines suggested that DaimlerChrysler was considering a reorganisation of its Asian operations that could see BJC closed down and production shifted elsewhere in SE Asia. This agreement at least confirms DC’s commitment to the future of the operation. In spite of the problems the venture has experienced (including a poor financial performance and disappointing sales – SUVs have a downscale image in China) DC officials are thought to have concluded that the bridgehead in the world’s most populous country was just too valuable to walk away from.
Go deeper with GlobalData
The parties will now continue their cooperation in China with an agreement that extends the joint venture until 2033. Beijing Jeep Corporation became China’s first automotive joint venture when it was established in May 1983.
“This extension of the agreement between Chrysler Group and BAIC is a clear indication that we have a long-term commitment to this joint venture and to our presence in China and the region,” said Dieter Zetsche, Chrysler Group President and Chief Executive Officer. “The introduction of the Jeep Grand Cherokee, and the two new models in the pipeline, are clear evidence that BJC will be a competitive player in the new automotive environment created by China’s accession to the World Trade Organisation.”
Last September, Beijing Jeep started local production of the Jeep Grand Cherokee and during the next two years BJC will also start production of two new models. The company said that details of the two new vehicles will be announced later this year.
“We have enjoyed a very fruitful 19-year relationship,” said An Qingheng, Chairman of BAIC/BJC. “Beijing Jeep was the automotive joint venture pioneer in China. Since 1983, we have introduced new production technologies and helped to launch the modern sport utility segment in China. We are confident that our partnership will continue to grow in the future.”
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataIn a statement DaimlerChrysler said that modern production initiatives and closer cooperation with local suppliers will allow BJC to become more efficient while continuing to improve product quality. The company currently produces the Jeep Grand Cherokee, the BJC Cherokee, and the utility vehicle BJ2020.
“In an effort to increase sales and improve service, we also plan to strengthen the dealer network,” said Thomas Hausch, Executive Director of International Sales and Marketing, Chrysler Group. He indicated that Chrysler Group is exploring, together with its global alliance partners, how to better leverage its sales and service presence in the market.
“This agreement and our active business initiatives are a crystal clear indication of DaimlerChrysler’s strong and long-term commitment with China,” said Eike Lippold, CEO of DaimlerChrysler China Limited (DCCL).
The agreement calls for DaimlerChrysler to hold 42.4% ownership stake at BJC while BAIC retains 57.6%.
Beijing Jeep Corporation became China’s first automotive joint venture when it was established in May 1983.
