Mercedes 2008 Annual Report Download - page 52

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Portfolio changes. With the goal of strengthening our core
business and utilizing new growth potential, we took some impor-
tant steps for the expansion of our business portfolio in 2008.
In April 2008, Daimler AG and the Indian Hero Group signed the
articles of incorporation for a commercial-vehicle joint venture.
Daimler Hero Commercial Vehicles Ltd., in which Daimler holds a
60% stake, will at first produce light, medium and heavy-duty
commercial vehicles for the Indian volume market under a new
brand name in a newly built factory in Chennai. At a later date,
the production of trucks for export markets is also planned.
In June 2008, Daimler AG acquired a 22.3% equity interest in
Tognum AG from EQT, a Swedish financial investor, and purchased
a further 6.1% of Tognum’ shares on the stock exchange. The
total price paid amounted to €702 million. In the past two years,
Tognum has become one of the world’s leading suppliers of
off-highway engines with above-average operating margins. This
business has great growth potential. Another advantage of this
equity interest is that it will secure our long-term supply relation-
ship with Tognum.
In August 2008, Daimler AG and Beiqi Foton Motors Ltd. signed a
letter of intent concerning the establishment of a joint venture.
The objective is to produce medium and heavy trucks and tech-
nologies for the Chinese market and in a second step also to utilize
expansion opportunities outside China. The approval of the Chinese
authorities is required for the establishment of the joint venture.
In Moscow in December 2008, Daimler AG, Kamaz, state-owned
company Russian Technologies, and Troika Dialog signed an
agreement covering an exclusive strategic partnership. The agree-
ment includes the acquisition by Daimler Trucks of a 10% stake
in Kamaz from Troika Dialog, a Russian investment company. The
strategic partnership with Kamaz, the market leader for heavy-
duty trucks in Russia, is part of our growth strategy in the BRIC
countries. As a result of the technology transfer and various
joint projects, both companies will benefit from this strategic
partnership.
Also in December 2008, subject to the approval of the antitrust
authorities, Daimler AG acquired a 49.9% equity interest in Li-Tec
Vermögensverwaltung GmbH (Li-Tec). Evonik Industries AG
holds the remaining 50.1% stake. On the basis of Evonik’s lithium-
ion technology and Daimler’s know-how, the two partners will
push forward with the research, development and production of
battery cells and battery systems. Evonik is the technology
leader for high-tech battery cells capable of going into series pro-
duction, and is significantly ahead of the competition in several
aspects of this technology. In recent years, Daimler has registered
more than 230 patents in the field of lithium-ion batteries. The
two companies will together establish a joint venture, which will
concentrate on the development and production of batteries
and battery systems for automotive applications. 90% of this joint
venture will belong to Daimler and 10% to Evonik.
Since the middle of 2008, Daimler has been holding discussions
with Cerberus Capital Management concerning the transfer of
its 19.9% equity interest in Chrysler Holding LLC. Those discus-
sions had not yet been finalized when this report went to press
at the end of February 2009.
Repositioning of truck business in North America. In October
2008, within the context of the Global Excellence Program,
Daimler Trucks North America (DTNA) presented a far-reaching plan
for the optimization and repositioning of its business operations.
The Group thus reacted to the ongoing weak demand in the entire
industry and to the structural changes in key markets. As of
March 2009, production of Sterling brand trucks will be discon-
tinued. DTNA will thus concentrate its development and sales
resources on the Freightliner and Western Star brands. This will
allow increased innovation in the areas of safety, environmental
compatibility and customer benefits. With the discontinuation
of the Sterling brand, production will be ended at the plant in
St. Thomas, Ontario, and as of June 2010, the plant in Portland,
Oregon will be closed. These actions should lead to annual
earnings improvements of US $900 million as of the year 2011.
In February 2009, a new plant was opened in Saltillo, Mexico,
where the Cascadia, the new flagship of the Freightliner brand,
is now produced.