Daimler to Buy Stake in BAIC to Push Growth in China image

According to anonymous sources Daimler plans to purchase stake in Beijing Automotive Group’s auto unit to secure its influence in BAIC before an IPO.

Daimler is expected this week to announce that it will purchase 10% to 20% in BAIC’s auto division. As part of the transaction, BAIC would increase its stake in the production JV that the two companies operate in China, to 51%. Currently, both Daimler and the Chinese company own 50% of Beijing Benz Automotive, which manufactures the GLK SUV and the Mercedes C- and E-Class sedans.

Earlier this month Daimler Chief Executive Officer Dieter Zetsche announced at the Detroit auto show that the company is negotiating its part in a possible BAIC share sale, but didn’t offer any further details. The two companies also jointly own the sales and marketing organization in Beijing Mercedes-Benz Sales Service, which was created in December to combine marketing of locally produced and imported cars.

Zetsche has promised that by the end of the decade Mercedes will regain the top spot lost in 2005 to BMW. But VW’s Audi, currently on the second place, is pursuing the same goal. In 2012 Mercedes lost more ground in front of BMW and Audi as its sales slowed in China compared with its two rivals.