Daimler Plans Electric Smart Car for China

By PATRICIA JIAYI HO AND NORIHIKO SHIROUZU
BEIJING -- Daimler AG plans to start a pilot program for an electric version of its Smart minicar in China next year, joining a growing list of firms evaluating the potential for next-generation clean-energy vehicles in the world's biggest automobile market.
Daimler is currently considering which cities to test the cars in, said Ulrich Walker, chairman of Daimler Northeast Asia, in a year-end briefing with reporters. "We have to see the acceptance of this car," he said.
The move follows an announcement by the central government last week that it will subsidize private purchases of alternative-energy vehicles in five cities.
Chinese auto makers such as BYD Co., which plans to market all-electric battery cars and other clean-energy cars, say government subsidies are key if pricey alternative-energy vehicles are to be feasible in China on a large scale for consumers and producers.
The German auto maker's move highlights the potential it sees in China for all-electric and other new-energy cars. "We think there are opportunities for electric [vehicles] in China and we are exploring opportunities," Beijing-based spokesman Trevor Hale said.
Daimler's Mercedes-Benz unit currently sells the S400 Hybrid in China, which is based on conventional hybrid technology. Electric vehicles and plug-in cars use newer technology that allows vehicles to be driven exclusively or primarily on electricity.
Nissan Motor Co. said in November it plans to test-market its Leaf electric in China in 2011 by making it available to government agencies and other fleet customers in the city of Wuhan.
General Motors Co. intends to launch the plug-in hybrid electric vehicle Chevrolet Volt in China, starting in 2011. The Volt is powered by lithium-ion batteries and is supplemented by a gasoline engine.
Toyota Motor Corp. has also said it will likely test-market a plug-in hybrid in China.
Meanwhile, Daimler said more Mercedes-Benz buyers are turning to financing rather than cash for their purchases, perhaps reflecting a slowly growing acceptance of credit use. Mr. Walker said Mercedes-Benz's financing portfolio for retail customers and dealerships in China has doubled to 4 billion yuan ($586 million) from the end of 2008.
About 12.5% of Mercedes-Benz vehicles sold in China were bought on credit, as opposed to cash, Mr. Walker said, without giving last year's rate. In smaller cities, financing rates were as high as 30%, he said. Those rates are still relatively low and compare to 50% in the U.S. and Europe, according to the company.
Daimler received regulatory approval to offer vehicle leases in February, but Chinese customers have been slow to embrace the concept, Mr. Walker said.
Mr. Hale said Mercedes-Benz expects its sales in China next year to be "much better" than the overall market's estimated 15%-20% growth. Mercedes-Benz sales in China in the January-November period rose 68% to 59,150 units.