Mercedes Expands Activities in China image

Daimler AG and its Chinese partner Beijing Automotive Industry Corporation (BAIC) today signed a strategic framework agreement to further expand their cooperation in China.

With this agreement, Daimler is further expanding its activities in China and the successful cooperation with BAIC. About 2 billion euros will be invested in the Joint Venture Beijing Benz Automotive Co, Ltd. (BBAC).

Local passenger car production for the Chinese market will be expanded to include the GLK compact SUV as of 2011 as well as three models of the new generation of Mercedes-Benz premium compact cars. The first of these models will be produced as of 2013; the two others will follow step by step.

Current production capacities of about 80,000 units for the C-Class and the E-Class long version will be further expanded in line with market demand.

As of 2013, a new engine plant will produce 4-cylinder gasoline engines, which will be used in locally produced Mercedes-Benz passenger cars and vans. The planned technical capacity of this engine plant will be expanded to 250,000 units, of which up to 100,000 units per year will initially be utilized. Further capacity utilization can be ramped up in line with further sales growth.

A new R&D center will be established, which will mainly focus on vehicle testing and adaptation as well as R&D activities with suppliers.

These investments are part of the overall investment program, according to which Daimler and its partners will invest a total of about 3 billion euros in China in the next few years.

Especially in China, there is an enormous growth potential in the premium compact segment. While in 2010 some 770,000 Chinese customers decided to buy a vehicle of that segment, the company expects this market to grow to more than 2 million units annually by 2020. This would boost China’s share of global premium compact sales to more than 20 percent from the current 12 percent and make it the largest market for premium compacts worldwide.