The tie-up with Daimler AG, Mercedes-Benz's parent, will focus on converting Mercedes' commercial vehicles into special purpose models, said Brilliance Chairman Qi Yumin at a media briefing in Shenyang last Friday.

"The market for special purpose vehicles has potential. Although it won't have big market share, the profit margin is promising," said Qi.

To further develop in special purpose vehicles segment, Brilliance has schemed to set up four manufacture bases in China, "with one in Tieling (Liaoning province), one in Shanghai, and rest two planned in South China and North China respectively," said Qi.

After foraying into new segment, Brilliance, German luxury carmaker's Chinese partner, is expecting to boost its sales to more than 450,000 units in 2010 from 280,000 in 2008.

However, Wang Hui, senior public relation manager of Daimler Northeast Asia, denied the cooperation yesterday, with "no comment and information could be provided as it's an unilateral speculation of Brilliance".

Brilliance Auto has cooperated with BMW for six years, now manufactures BMW 3 series and 5 series sedans in Shenyang, the company's headquarters in Northeast China.

Daimler produces Mercedes-Benz premium sedans in the capital city under partnership with Beijing Automotive Industry Holding Corp (BAIC). It also achieved agreement with BAIC's subsidiary Beiqi Foton Motor Co, China's largest commercial vehicle producer, earlier this year to set up a medium-to-heavy truck venture.

In 2007, the German automaker also joint invested 249 million euros with Taiwan's China Motor to establish a 50-50 venture with China's Fujian Motor, producing vans with annual production capacity of 40,000 units in Fuzhou. The production will start this September.

"At current stage, we don't have plan to establish the second light commercial vehicles joint venture in China other than our Fujian facility," said Wang of Daimler. "As for the special purpose vehicles modification business, we have already two partners in China, Zhejiang Zhongyu Group and Shanghai Pingzhi Auto."

Moreover, BAIC, which just lost bid for GM's ailing Opel, has transferred its focus to Fujian Motor's stake in Daimler cooperation inside the country.

The China's fourth largest auto group plans to pay around 700 million yuan for a 40 percent stake in the van venture, leaving Fujian Motor 10 percent shares.

"The major stake in Fujian Daimler venture's transfer to Daimler's original local cooperator BAIC makes it possible that Daimler can form a new plant with new Chinese partner, as Chinese government regulates that the foreign automaker can only have two Chinese partners to producer vehicles," said an anonymous auto analyst.