Daimler and BAIC Expand Agreement

Daimler announced today it is further expanding its activities in China, following a strategic framework agreement signed with its Chinese partner Beijing Automotive Industry Corporation (BAIC) today. About 2 billion euros will be invested in the Joint Venture Beijing Benz Automotive Co, Ltd. (BBAC).

As part of the agreement, 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.

“With this framework agreement, we are laying the essential strategic foundations for our long-term and significant participation in the growth of the key market China. The projects agreed upon are further central elements of our China strategy for the sustainable development of our business. As early as 2020, at least one in five premium compact cars is expected to be sold in China. In the light of this enormous growth potential, we are resolutely switching to attack mode with the local production of our new compacts,” said Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars.
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