Commitment key for Daimler's success in China

As the inventor of the automobile, Daimler has a fascinating history that dates back 128 years. It is therefore fitting that the Stuttgart headquartered company has created close-knit partnerships in and made major commitments to China, a country that is also renowned for its storied past.

While Daimler has been active in China for years, its presence has grown larger together with the country's automotive market. Today, Daimler has a number of joint-ventures in China that produce and distribute passenger cars, vans, trucks and most recently, all-electric vehicles.

Dieter Zetsche, chairman of the Board of Management of Daimler AG and head of Mercedes-Benz Cars: "Our job is to develop clean, safe and fascinating products to meet the increasing demand for mobility in the future."

According to Zetsche at this year's Daimler annual shareholders' meeting, that includes the expansion of all activities in China, such as the doubling of production capacities by 2015 to more than 200,000 cars, the enormous expansion of the dealer network in China with 100 new dealerships set to open this year alone, refinancing in the Chinese capital market, and the development of the DENZA electric car with the partner BYD.

Hubertus Troska, member of the Board of Management of Daimler AG with responsibility for China, and chairman and CEO of Daimler Greater China shared the same confidence: "With strong products, long-term partnerships and continuous investment, Daimler's confidence and commitment to China are today higher than they have ever been before. Daimler's road to success goes always hand in hand with the development of Mercedes-Benz - in China, like elsewhere. Without doubt Mercedes-Benz will grow strongly in China."

Mercedes-Benz for strong growth

Globally, Mercedes-Benz saw double digit growth every month since the beginning of the year with 374,276 cars sold (15.2 percent year-on-year increase), marking its best first quarter to date.

Contributing to that overall success is Mercedes-Benz' substantial growth in key market China: the brand grew 47 percent in the first quarter of 2014, and 29 percent in March marking 12 consecutive months of sales increases since Daimler and partner BAIC formed the joint sales organization Beijing Mercedes-Benz Sales Service Co Ltd in March 2013.

"China is one of our key markets driving growth, and developments here are very important to fulfill Mercedes-Benz' 2020 targets on a global level," said Troska.

With these results, Mercedes-Benz' ambitious goal of selling more than 300,000 units in the country by 2015 are well within reach, especially as the brand continues- on a global level - its biggest ever network expansion with the addition of 100 new retail outlets in 2014, 65 percent of which will be in lower tier cities.

A key component to that goal is also the company's ongoing product offensive that will see over 20 new or face-lifted models in China through 2015.

Most importantly, the all-new C-Class long wheelbase will be premiering at Auto China today and is expected to raise the bar in its class in terms of safety, technology, comfort and design.

"With over 150,000 units delivered of the current model series alone, the C-Class has always been at the core of our development in China. The all-new C-Class long wheelbase is an outstanding car and will definitely be one of our top growth drivers in the Chinese market," noted Troska.

"The car is just the latest proof of our commitment to this great country - built in Beijing, for China. And that also goes for its heart, engines that come from Mercedes-Benz's first ever engine site outside Germany."

Built in China, for China

The all-new C-Class is, alongside the E- and GLK-Class, produced at Beijing Benz Automotive Co. Ltd. (BBAC).

In early 2015 the GLA-Class, a premium compact SUV, will also be produced at the site. In fact, BBAC is today already a main production hub for the brand: about 50 percent of Mercedes-Benz' China sales were produced locally in 2013.

And as the three-pointed star strengthens its local production footprint by continuous investment and development, BBAC is destined to become the biggest Mercedes-Benz plant worldwide. By 2015 at least 200,000 cars will be produced at BBAC locally.

In 2013 Mercedes-Benz marked another important milestone in its localization strategy in China with the official opening of its engine plant, built from scratch and completed in two years based on an investment of 400 million euros ($552.6 million).

The site manufactures four and six-cylinder engines to power BBAC's passenger cars and Mercedes-Benz vans produced locally at Daimler's joint venture Fujian Benz Automotive Co Ltd.

This year, key machined components like cylinder blocks, cylinder heads and crank shafts will be exported to Germany, as proof of the quality of Chinese manufacturing.

Mercedes-Benz' renowned quality standards have been built into every step of both engine and vehicle production processes at BBAC, extending along the entire supply chain.

In this way, it is assured that every engine and every car built in China lives up to the brand value of "the best or nothing" in exactly the same way as products from any other Mercedes-Benz plant worldwide.

Daimler's localization strategy for China extends beyond production, as an increasing percentage of suppliers have been locally-based and local R&D plays a larger role as well.

Just two examples: BBAC's brand new R&D center will be inaugurated this July, including the first Mercedes-Benz prototype workshop outside of Germany.

Daimler's own R&D activities, which started back in 2006 for the localization of C- and E-Class, cover today a wide spectrum of departments and tasks ranging from the Mercedes-Benz Advanced Design Center to a localized team of telematics experts.

"At Daimler we think global and act local. Our research and development activities in China underline our goal to be closer to the market and ensure that the needs of our Chinese customers are even better understood and reflected in our products," Troska stated.

Success built on strong partnerships

Daimler's strong commitment to its Chinese customers and China itself has been backed up by strong ties uniting the company with its Chinese partners.

The German automaker has a particularly close relationship with BAIC Motors, taking a 12 percent stake in its partner in November of last year, in the process becoming the first non-Chinese automotive company to acquire an interest in a Chinese OEM.

This was followed in March with the signing of a 1-billion-euro agreement to further expand capacity of their joint car and engine factory, bringing total investment at the BBAC site to 4 billion euros through 2015.

Daimler's strong alliances in various automotive segments have led to important breakthroughs on multiple fronts.

To take sustainable mobility as an example: the E-Class 400 hybrid, launched in 2013, is the first locally produced hybrid model by a German premium manufacturer in China. And the world premiere of DENZA at Auto China 2014 is just another instance of Daimler's pioneering work in the sector.

DENZA is the culmination of cooperative efforts at the 50:50 R&D technology joint venture established by Daimler and BYD back in 2010 - Shenzhen BYD Daimler New Technology Co Ltd, the first Sino-German joint venture dedicated to an all-electric vehicle in China.

Combining Daimler's renowned tradition and engineering expertise as a worldwide leader in safety technology and quality excellence with BYD's leading battery technology, DENZA is the safest, most reliable, and most convenient electric vehicle - designed, engineered, and produced for China, in China.

"Daimler is at the forefront of emission-free mobility, and with our DENZA we are also on the right track in China which is destined to become the most important electric vehicle market in the world. Following this conviction, we are showing our full commitment to the Chinese market with the most serious approach in locally designing, developing and manufacturing an all-electric vehicle," summarized Troska.

With extensive coverage of China's automotive segments, strong local partners, great products and a forward thinking strategy, Troska is very confident that Daimler has the right pieces in place to sustain strong growth in the country: "China is our home-away from home, and we will continue our commitment here and so push Daimler to the next level".