Daimler invests in China and cuts in EU
Daimler will continue to invest in its largest market, China. Meanwhile, in Belgium, Spain, and the UK, it tries to eliminate the dealers it owns and manages itself.
In China, the biggest car market in the world, demand for luxury cars is booming again. That’s good news for Daimler: last year, Beijing Benz Automotive Co (BBAC) already sold a record number of 611 000 vehicles (+8% compared to 2019). That’s more than the sales in the US and homeland Germany combined.
In China, the German premium car manufacturer has a joint venture with the Chinese car manufacturer BIAC Motor. With them, it has two factories producing 520 000 vehicles per year.
To meet the growing demand, Daimler wants to raise the capacity of these plants by 45%. It wants to do so by expanding the number of labor days and shifts. As a result, the number of labor days in the factory will be raised to 312 per year (compared to 290 and 250 at the moment).
In one of the two factories, the third shift of 7,5 hours will be added. However, there has been given no information about the height of investments involved.
Apart from those two factories, BBAC also has another factory reserved for electric vehicles, with a capacity of 150 000 per year. Some time ago, Daimler also announced that it would build a completely new, electric Smart together with Geely as of 2022.
Chinese market experts expect that the Chinese market in 2025 will already have more than 20% of the total sales occupied by pure electric or plug-in hybrid models.
Meanwhile, Daimler wants to sell part of its dealer network in Belgium, Spain, and the UK. Some 25 showrooms/repair shops are concerned, according to the German newspaper Handelsblatt.
Daimler hopes to save 1 billion euros in total by selling those dealers to interested third parties. “Selling doesn’t mean closing,” says a Daimler spokesman, “during the negotiations, long-term activity and the continuation of the brand will be high on the priority list.”
In these 25 showrooms and repair shops, some 2 800 people are working. “We want to see if selling has a sense; we don’t intend to close the dealerships,” says Daimler spokeswoman in Belgium, Helen Van Nuffelen, in the newspaper De Tijd.
Daimler has 78 dealers at the moment in Belgium and Luxembourg. How many are concerned and who they are, is not mentioned. However, if one takes a closer look at the dealer list, one can suppose that some nine dealers in the Belux area are concerned.
“Our goal is to offer a long-time perspective for our workforce and to support our clients locally as well as possible,” the message from the headquarters in Stuttgart concludes.
The distribution system of cars is clearly under scrutiny for many car manufacturers. It’s archaic and costs a lot of money are the two criticisms one often hears. That’s why a lot of companies are reviewing their systems.
Some weeks ago, the new car group Stellantis put an end to the contract of all their dealers. By 2023, a new organization must be put in place where the selected ‘survivors’ become multi-brand dealers of all the 14 makes within the group.
Other manufacturers or importers are working along the same lines, while big international dealer networks try to get their part. Dealer groups like Van Mossel (Dutch) and Hedin (Swedish) are already well established in Belgium and still expanding. The small, independent dealers will be paying the price.