Daimler’s localization gears up for future growth
Daimler’s decade-long partnership with BAIC Motor has been a win- win relationship based on trust and long-term commitment, according to the company’s senior official.
The cooperation with its local partner has been an important pillar of success in China, which is a key market for Mercedes-Benz , said Hubertus Troska, a member of Daimler’s Board of Management and president and CEO of Daimler Greater China.
The Sino-German partnership was launched in 2003, when both partners signed a framework agreement on strategic cooperation, and over the following decade their resulting joint- ventures in China, namely Beijing Benz Automotive Co and most recently Beijing Mercedes-Benz Sales Service Co, have produced remarkable results.
“Build in China, for China. A key element of Daimler’s China strategy has always been to strengthen local production, so BBAC has become a main production hub for MercedesBenz,” said Troska. “With the establishment of BMBS on March 1 and Mercedes-Benz’ strong offensive in product and network expansion, we have set the course right for future sales growth in China.”
The latest milestone for the two companies is the launch of the new long-wheelbase E-Class launch at the Chengdu Motor Show. In fact, the E-Class, which has been produced at BBAC since 2005, was the first ever Mercedes-Benz model to be locally produced in China.
Since its introduction, the E- Class has been one of the core products shaping Mercedes-Benz’s growth in China.
Additionally, the longwheelbase version of the prestigious executive limousine is the first, and to this day only, Mercedes- Benz tailor- made for a single country.
Troska said he believes the new E-Class, which comes in two distinct model lines with new technology taken directly from the brand’s flagship allnew S-Class premiering later this year, will be a big hit with Chinese consumers.
“The E- Class has always been at the core of our development here. And with the new model we demonstrating once again that Mercedes-Benz is putting the customer first,” he said.
Troska also says Daimler is investing for the long-term in China and points to the massive upgrade and expansion of the BBAC plant to underline the company’s past success and future ambition in the country.
“BBAC is both a demonstration of our successful partnerships in this key market and a clear proof of our confidence in Mercedes-Benz’ future here,” said the executive.
The cornerstone for a plant extension was laid last September.
“Daimler is investing 2 billion euros ($ 2.67 billion) to more than double the capacity, and in a few years BBAC will become the biggest car plant for Mercedes- Benz worldwide,” said Troska.
Currently, the BBAC plant is increasing its production capabilities for existing models. In addition to the long-wheelbase E- Class, BBAC produces in Beijing the C-Class since 2008 and the GLK Class since 2011.
In the near future the GLAClass, a premium product for the fast-growing compact SUV segment, will become the fourth locally produced model of the brand with the threepointed star.
Locally produced passenger cars made up about 50 percent of Mercedes- Benz’s China sales in 2012. With the huge additional investment and fast development at BBAC, Mercedes-Benz expects this figure to grow to at least two-thirds by 2015, with a sales target of more than 300,000 cars.
A new four- and six-cylinder engine plant at BBAC went online in May, the first ever Mercedes-Benz engine plant outside Germany and capable of producing 250,000 units annually, is also a key part of Daimler’s localization strategy. The engines will go into locally produced Mercedes-Benz passenger cars and vans.
Troska points out that BBAC also stands for an integrated location strategy, combining the production of various vehicle and engine types under one roof with Mercedes-Benz’ global production standards.
“We have invested in a topnotch facility and will deliver the world- renowned MercedesBenz quality. Locally produced key engine components will be exported to other Mercedes-Benz plants in the near future,” said Troska.
This is in addition to a research and development center that is being built at BBAC, the largest in a Daimler joint venture. Equipped with testing equipment mostly imported from Germany, it will ensure that future Mercedes- Benz ranges will be built with the requirements of Chinese consumers to the fore.
Ramping up its production capability and flexibility is important to Mercedes-Benz as the automaker pushes forward with its network development in the Chinese market.
The company plans to expand the number of its retail outlets by more than 75 dealerships in 2013 to cover 36 new cities, of which 45 percent will open in smaller third- and fourth- tier cities where the growth potential is the largest.
Troska underlines that the rapid growth of MercedesBenz’s network will be accompanied by the expansion of the brand’s capabilities in training and customer service.
The sixth Mercedes- Benz training center, capable of providing 55,000 training days to retail service staff, opened in Chengdu in April, and a seventh is slated to open in Shanghai in March 2014.
These facilities, second in size only to the automaker’s German-based facilities, and new services measures, will help ensure Mercedes- Benz customers receive a premium after-sales service experience and consumer protection.
Along with having a premium brand benchmark vehicle warranty of three years, the auto brand will soon debut its 3R service policy for new and old customers.
“I am confident that we are setting up for Mercedes-Benz a path of sustainable growth and a bright future in China,” said Troska.