OREANDA-NEWS. Daimler AG and its Chinese partner BAIC Motor Corporation today signed an agreement on the localization of further Mercedes-Benz compact car models beyond the GLA-Class at Beijing Benz Automotive Co., Ltd. (BBAC), the production joint venture of Daimler and BAIC Motor. The official signing took place with Hubertus Troska, Member of the Board of Management of Daimler AG responsible for China, and Xu Heyi, Chairman of the BAIC Group and its car division BAIC Motor.

The agreement will help Daimler strategically strengthen its local footprint, and shows the company's strong commitment to China and its strategic partner, BAIC. Daimler and BAIC Motor will invest a total of approximately EUR 4 billion in their joint venture BBAC by 2015, including today's pledge of EUR 1 billion for the localization of additional Mercedes-Benz compact car models.

The existing production capacities at BBAC for the C-Class, the all-new long-wheelbase version of which started rolling of the production lines just this July, the long-wheelbase E-Class, and the GLK-Class will be more than doubled to over 200,000 units per annum in 2015. The GLA-Class compact SUV will go into production as Mercedes-Benz's first locally produced compact car model early next year. It will be produced at BBAC's brand-new compact car site, whose cornerstone was laid in September 2012.

Daimler is one of the most successful automotive groups worldwide, and the BAIC Group, China's fifth-largest automotive group, is listed in the Fortune Global 500 ranking of the world's largest companies, with more than 2 million vehicles delivered in 2013. The two companies teamed up in 2003 for a long-term strategic partnership involving significant and continuous investments in China's automotive industry. Daimler further strengthened the partnership just one decade later, holding a 12 percent stake in BAIC Motor since November 2013.

Among the partnership's key joint ventures is BBAC, which has produced Mercedes-Benz cars since 2006 and engines since 2013. The Mercedes-Benz 4- and 6-cylinder engines produced at BBAC's engine plant are used in both locally produced cars from BBAC and vans built by Daimler's local joint venture Fujian Benz Automotive Co., Ltd. (FBAC). The production line was designed with flexibility in mind, with an annual capacity of 250,000 units for the first phase.

A new BBAC R&D site became fully operational this July, and as the largest of Daimler's joint venture R&D centres in the world provides component and vehicle testing while supporting all production tests as well as future localization.

Another strategic component of the partnership between Daimler and BAIC is Beijing Mercedes-Benz Sales Service Co., Ltd. (BMBS). This company became operational in March 2013, unifying and managing all sales and after-sales activities for imported and locally produced Mercedes-Benz cars under one roof. The establishment of the joint venture is a key milestone for the sustainable growth of Mercedes-Benz in China, where the company delivered 218,045 Mercedes-Benz cars in 2013 alone, an increase of 11% over the previous year. BMBS picked up the pace even more in 2014, with sales up to September reaching 203,485 units, a 30.5% year-on-year increase.

These sales figures were strongly supported by Daimler Financial Services (DFS), which has provided automotive financing in China through Mercedes-Benz Auto Finance China since 2005. Established in 2012, Mercedes-Benz Leasing Co. Ltd. added leasing services to the product portfolio. One out of five Mercedes-Benz vehicles in China is financed by Daimler.

Daimler and BAIC's partnership extends beyond passenger cars. Jointly manufactured medium- and heavy-duty trucks have been rolling off the production lines of Beijing Foton Daimler Automotive Co. Ltd. (BFDA) since mid-2012. In 2013, the joint venture sold 103,300 Auman branded trucks.