With Foton’s proud tradition in China and Daimler’s long tradition in commercial vehicles, the newly-formed Beijing Foton Daimler Automotive Company is clearly set to go places. JACO DE KLERK was in China to find out more.
The joint venture between Foton Beijing and Daimler-Benz was nine years in the making and represents the latest step in the evolution of China’s automotive industry. The new company – officially launched in Beijing on February 18, 2012 – will produce Auman trucks powered by Mercedes-Benz technology.
Foton already has a similar – and successful – international partnership: Beijing Foton Cummins Engine was established in March 2008, and led to the successful manufacturing of a range of high-end light commercial vehicles.
Daimler is one of the world’s largest truck manufacturers and aims to improve on that position through the creation of outstanding value and quality.
The new venture gives Foton access to Daimler’s advanced research and development as well as its global operational experience and resources. The arrangement also holds advantages for Daimler, since Foton is the leading manufacturer of commercial vehicles in China and the largest manufacturer in Asia, ranking first in 2009 for global commercial sales.
Andreas Renschler, head of Daimler’s truck division, says the company believes in the potential and economic value of China. “We follow a simple philosophy; think globally and act locally. We wanted to find a strong Chinese partner, a partner who fits our strategic purpose, with which we could combine our strength and provide ideal solutions for our customers in China.”
“There is no doubt in my mind that Foton is exactly the right partner,” he adds. “When we started our negotiations, China was still an emerging automotive market – today it is the world’s biggest single market for cars and trucks in terms of production.”
China’s medium and heavy-duty truck sales are almost twice that of the United States, Western Europe and Japan combined. “Foton is the leading manufacturer of commercial vehicles and the number three producer of heavy duty trucks in China,” says Renschler. “Together, we will build vehicles that are tailor-made for the needs of Chinese customers in terms of parts, durability and performance. Combining Foton’s proud tradition in China and Daimler’s long tradition in commercial vehicles, we have a bright future in this country and beyond.”
The combined venture entails a total investment of RMB6,35 billion (R7,78 billion) and a registered capital of RMB5,6 billion (R6,86 billion). Foton Daimler will manufacture Foton’s existing Auman medium and heavy duty trucks with the Daimler-licensed 360,39 kW (490 hp) Euro 5 heavy-duty truck engines.
Traditionally, a joint venture in China’s automobile industry meant the introduction of foreign models through local assembly plants. However, the Foton Daimler arrangement will see Foton maintain ownership of the technological rights, patent and brands of Auman medium and heavy-duty trucks in all markets – with Daimler providing technical and expert support to promote quality and assist in the development of new products aimed at the Chinese market. Daimler will also market future Auman vehicles produced by Foton Daimler in international markets through its sales network.
The two companies will also set up shared ventures in Russia, South Asia, Central and South America – with the operational headquarters of global co-operation located in Beijing. This centre of operations will be responsible for management, decision making, research and development, production, supply chain and marketing management – while joint ventures in other countries will serve as regional production and sales divisions. Thus, Foton Daimler, using Auman trucks powered by Mercedes-Benz technology, intends to build a global operation centre in China that will ultimately aim for the world.
To speed up the process of globalisation, Foton will implement its 2020 strategy with a 5+3+1 formula:
• The ‘5’ refers to the construction of five international factories – in Russia, India, Brazil, Mexico and Indonesia – which will each have the capacity to produce 100 000 vehicles per year. The factory in Russia is already complete, while the plant in India, construction of which is underway, will be up and running by 2014 – making Foton China’s first commercial vehicle enterprise with an overseas plant.
• The ’3’ refers to a series of additional key projects that Foton plans to undertake. According to Wang Xiangyin, vice president of the Foton motor group and general manager of overseas operations, the company aims to adjust its product structure to produce high-end vehicle and engine parts to enter the vehicle manufacturing markets in the European Union, North America, Japan and South Korea (which will be managed as one market) by late 2014 or early 2015. Foton also aims to implement the standards used in these countries in terms of technology, emissions restrictions and safety requirements – making the company the first Chinese vehicle brand to enter the markets of developed countries.
• The ‘1’, according to Xiangyin, refers to the fact that Beijing will always be the centre of Foton’s production as well as its strategy. It also refers to Foton’s goal to become the leader and industry standards-setter in the Chinese market. In the words of Zhao Jingguang, deputy party secretary and spokesperson for Foton: ”Foton will focus on Beijing – we will take China as the centre and become a truly world-class mainstream vehicle brand through strategic alliances with world-class companies such as Daimler and Cummins.”
The alliances with Daimler in Germany and Cummins in America give Foton access to first-class research and development initiatives. Apart from Beijing, the company has also established its own research and development centres in Japan, Germany, Taiwan and other countries. To achieve its 2020 strategy, the company is sparing no effort in producing a brand compliant with international standards in the fields of development, production, marketing and services. These standards were at the fore when Foton constructed its second Auman Factory as well as its utility plant, heavy machinery factory and eight other projects in China.
Furthermore, Foton’s Auman Global Digital Model Factory uses manufacturing equipment from four international and eight domestic countries and regions. The company also uses a strict management system and leading international processes in the construction of its products, which undergo 36 tests during the quality supervision system, resulting in the creation of high-quality heavy-duty trucks on a par with global standards. This factory will focus mainly on the manufacturing of Foton’s Auman GTL (Global Technology Leader) model, also launched on February 18.
The Auman GTL is China’s first heavy-duty truck fully in line with international standards and was awarded the Rhineland Certification by Germany’s third-party security certification authority – the highest safety standard certificate for global heavy-duty trucks. To further the GTL’s transition into the global market, Foton has ensured that the truck complies with international active and passive safety standards, low fuel consumption system design, intelligent control systems and humanised vehicle design.
It’s clear that this joint venture and the new Auman GTL will do great things for both Foton and Daimler. It will also provide advantages for international markets, including South Africa.
Des Botha, product specialist at Foton Trucks South Africa (Foton SA), says the benefits of the partnership are already obvious, specifically with regards to the 6×4 truck tractor the company intends introducing locally.
“Having global giants such as Daimler-Benz and Cummins Engines in joint ventures bodes extremely well for us in South Africa,” adds Botha. “The new Auman GTL will be available with automatic transmission, the concept of which has proven to be substantially more fuel efficient – reducing operational costs and being more environmentally friendly.”
Botha says Foton pays great attention to quality and to South Africa’s SABS homologation requirements. He believes the GTL will perform admirably in South Africa. “With major components matching engine power to correctly specified drivelines, I have no doubt that operators will find that this road tractor makes economic sense for both long haul and medium distance deliveries.” He adds that the back-up and understanding Foton SA receives from Foton China in terms of South Africa’s specific road traffic regulations and requirements is outstanding.
Ismail Asmal, chief executive officer of Foton SA, says the GTL will initially have a Euro 3 engine with Euro 4s and Euro 5s being used later. These vehicles will be available in South Africa once they can be converted to right-hand-drive models, adding an exceptional addition to an already outstanding arsenal of models. “We are very confident in our products, always ensuring that our standards meet that of Foton and the South African market,” adds Asmal. “Our customers are also very happy with the good, high quality products and services that we deliver.” Foton SA will celebrate, in the near future, its first customer reaching a 100 000 km driven – showing that these vehicles and the company can surely go the distance.
This joint venture will clearly be beneficial to both Foton and Daimler – offering world-class heavy-duty trucks at affordable prices.