Beijing Foton Daimler Automotive (BFDA), the joint venture between Daimler AG and Chinese truck manufacturer Foton, will build a new engine plant next to its Beijing headquarters in Huairou district. The company said construction of the plant will begin in the first half of 2013 at a cost exceeding $156 million.

“This investment once again demonstrates that we are putting our ‘Global Excellence’ strategy into practice and that our involvement in China is of a sustained, long-term nature,” said Andreas Renschler, the Daimler board of management member responsible for Daimler Trucks and Daimler Buses. “As is the case in all of the new growth markets, we are consistently applying our principle of operating as globally as possible on the one hand and as locally as necessary on the other.”

The plant, expected to be completed in 2014, will produce OM 457 engines, which will power the joint venture’s Auman brand of trucks. A nearly identical engine is being used in Mercedes-Benz commercial vehicles in Europe and Latin America.

Initial plans call for 40% of the engine components to be produced in China with that rate rising to more than 65% eventually.

“This process has made very satisfactory progress. We have already found renowned suppliers for the key components. These suppliers were selected after extensive tests which showed that they meet our high standards with regard to quality and business ethics,” said Stefan Albrecht, executive vice president of BFDA.

The new engine plant will cover an area of around 30,000 square meters in close proximity to the Auman trucks production site in Beijing’s Huairou district. Once ramped up, it will employ more than 500. Production capacity at the plant will be designed for up to 45,000 engines per year.

As soon as the Chinese emissions standard China IV (which corresponds to Euro IV) is introduced as planned next year, customers will be able to order the Auman truck with either a conventional engine or the OM 457.

Until the new plant is completed, the Mercedes-Benz plant in Mannheim will deliver the engines completely built up to China, the company said.