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Daimler Plans to Build Mercedes Benz-Branded Trucks in China

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According to Reuters, Daimler AG DDAIF intends to build Mercedes Benz-branded heavy trucks in China by reorganizing the truck plants that are already owned by the company’s local joint venture.

The deal is expected to strengthen the association between Daimler and its Chinese truck JV partner, Beiqi Foton Company. This comes after the 5% stake purchase in Daimler in July by its Mercedes Benz passenger car partner, Beijing Automotive Group Company Limited (BAIC), Foton’s parent group.

The plan to localize Mercedes Benz-branded trucks had been long thought of and is not associated with BAIC Group’s stake purchase in Daimler.

In 2016, Daimler had revealed to the German media about its plan to make Mercedes Benz-branded Actros heavy trucks in China by the end of the decade. However, there were no further announcement about the same.

Reportedly, Beijing Foton Daimler Automotive (BFDA) will include Actros to its production lines that are primarily used to make Auman trucks, the sole truck brand of the joint venture.

The joint venture aims to revamp its No. 3 plant that holds an annual capacity of 60,000 heavy trucks. The plant will manufacture both Actros and Auman trucks. Further, it also aims to expand its No. 2 plant by 40,000 units to 100,000 units.

Currently, all Mercedes Benz trucks sold in China are being imported and priced higher than domestically available Auman trucks.

In the past three months, Daimler has underperformed the industry it belongs to. During the same time frame, the company’s shares have plunged 18.8% against the industry’s 3.2% growth.

Zacks Rank & Stocks to Consider

Currently, Daimler carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the auto space are Fox Factory Holding Corp FOXF, BRP Inc DOOO and Douglas Dynamics, Inc PLOW, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Fox Factory reported a positive average earnings surprise of 7.57% for the trailing four quarters. In the past three months, shares of the company have rallied 12.4%.

BRP delivered positive average earnings surprise of 6.71%. In the past three months, shares of the company have moved up 2.5%.

Douglas came up with a positive average earnings surprise of 32.45%. In the past three months, shares of the company have increased 9.3%.

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