BBD to get compensated $981 mln by Daimler

Shanghai, March 30 (Gasgoo.com) Beijing Benz Daimler (BBD, ex-BBDC), a joint venture between Beijing Auto and Daimler Ag, will receive 6.7 billion yuan ($981 million) in compensation from the German carmaker whose split with Chrysler has damaged the Beijing venture's assets and operation, China Business News reported today, citing an insider of BBD.

Daimler has already given Beijing Auto the first 1.7 billion yuan of the compensation. The total 6.7 billion yuan compensation scheme is considered as the biggest and most favorable one of its kind received by the Chinese side of a China-based joint venture. This ample sum of money can be used to balance off BBD's running losses and to finance its production line upgrade.

Due to its low sales in the recent two years, BBD/BBDC has seen much of its production capacity idle. In 2007 and 2008, the joint venture's losses exceeded 1 billion yuan. And this year the company will start its E-Class sedan project. So the money from Daimler is very timely under these circumstances.

Beijing Benz Daimler sold 875 C-class sedans in February 2009, up 41% from a year earlier. The company is set to make the Mercedes-Benz E-class soon for local Chinese market and will have to achieve at least 7.5 billion yuan in the sales revenue this year.

In late 2008, U.S. automaker Chrysler pulled out of Beijing-Benz DaimlerChrysler Automotive Co Ltd (BBDC), Daimler's joint venture with Beijing Auto. Beijing Auto has plans to buy Chrysler's assets in China.