Mercedes-Benz takes action to pursue premium rivals in China

Article by Andrew Christian, on January 7, 2015

Mercedes-Benz is currently behind rivals BMW and Audi in terms of sales both in China and around the world. Knowing this fact, Mercedes is taking definitive action to narrow the gap established by its two German rivals in China – making its local r&d operations much stronger than before and the possibility of launching products first in the country.

The carmaker’s lag can attributed to the fact that it had two competing sales organizations, has fewer dealers, and a seemingly lack of locally built compact crossovers. Mercedes development chief Thomas Weber told Automotive News Europe that in the past, the carmaker was behind competing manufacturers since China wasn't part of the first rollout phase for new vehicles.

"Why not be first at some point?” He noted that introducing a vehicle first in China would entail a massive investment in r&d, which is what Mercedes is intending to do. In the past few years, Mercedes parent Daimler has named a new board-level executive who would be responsible for China, has unified its local sales and distribution and added 179 dealerships.

Daimler also built a car engine site in China and acquired a 12-percent stake in joint venture partner BAIC Motor for almost EUR630 million ($769.2 million).

Mercedes will commence output of the GLA compact crossover early this year in China, adding to the production of its midsize GLK crossover and long-wheelbase versions of the E- and C-class sedans.

The carmaker is also bound to build compact cars at its joint venture plant in Beijing following a $1.2-billion investment by Daimler and BAIC.

For this year, Mercedes is targeting to sell over 300,000 cars in China, two-thirds of which would be built locally. However, building such large number of vehicles in China would mean higher level of local content, a larger pool of qualified suppliers and more testing operations as well as large investment.

Topics: mercedes-benz, china

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