Daimler to expand local Mercedes-Benz production with BAIC in China

German carmaker to invest over 1.5 billion euros to prepare BBAC to capitalise on further growth opportunities in the Chinese automotive market.

Autocar Pro News Desk By Autocar Pro News Desk calendar 26 Feb 2018 Views icon9182 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp

Foreseeing further growth potential in the Chinese automotive market, Daimler and BAIC today announced plans to further expand local production for the Mercedes-Benz brand at their joint venture, Beijing Benz Automotive Co (BBAC).

Through an investment totaling over 11.9 billion RMB (about 1.5 billion euros) by Daimler and BAIC, BBAC will prepare to operate another production location for high-quality premium vehicles, in addition to its established local production hub in Beijing’s Yizhuang industrial park. As part of the investment, a BAIC production facility located in the capital city’s Shunyi district will be transferred to BBAC, and modified to facilitate complementary production capacities for Mercedes-Benz cars. Furthermore, both partners will invest into new product localization at the future second Beijing-based Mercedes-Benz production facility.

Together with BAIC, Daimler continues developing BBAC into one of the most pioneering manufacturing hubs in Daimler’s global production network. The expansion of localisation announced today will allow Daimler to respond to increasing market demand with local models tailored to Chinese customers’ needs, including electric products from Mercedes-Benz’s EQ brand. Daimler is dedicated to furthering New Energy Vehicle (NEV) development in China, already the largest NEV market globally, as part of the company’s ‘Made in China, for China’ commitment.

“Local production is a strong pillar of our sustainable development in China. By deepening our cooperation with our local partner BAIC, BBAC will continue playing a key role for Mercedes-Benz in China,” said Hubertus Troska, Member of the Board of Management of Daimler AG, responsible for Greater China. “This production capacity expansion for BBAC will allow us to meet the expected growing demand for premium passenger cars in China, including for electric vehicles.”

“With over a decade of remarkable achievements, BBAC stands as evidence of the strong collaboration between BAIC and Daimler,” said Xu Heyi, chairman of the BAIC Group. “As a model of Sino-German cooperation, BBAC has set successive benchmarks in terms of technology and quality standards. Going forward, both partners will continue to support BBAC as it provides additional, attractive products, contributing to the development of the Chinese automotive industry.”

This deepening of the cooperation between Daimler and BAIC further demonstrates the strengths of combining ‘Industry 4.0’ and ‘Made in China 2025’. By using smart manufacturing and increased digitalisation, these efforts will help to further accelerate the manufacturing upgrade in China’s automotive sector. Mercedes-Benz’s unified global standards govern all production from BBAC. Production at the Shunyi facility will also follow the quality standards and processes, extending along the entire supply chain. As a full-fledged production facility, it will include a body shop, paint shop, press shop, as well as assembly lines.

“In 2017, Mercedes-Benz Cars has set the seventh production record in a row, also thanks to our strong growth in China. Globally, our plants run at full capacity, which is why we need further production facilities around the globe,” said Markus Schäfer, Member of the Divisional Board of Mercedes-Benz Cars, Production and Supply Chain. “BBAC is an integral part of our global production network of Mercedes-Benz Cars. With the new production location and our battery production planned in Beijing, we are progressing well with our electric initiative.”

China: Mercedes-Benz’s largest market
China last year was once again Mercedes-Benz’s largest single market, with local production of around 430,000 units accounting for over 70 percent of total local sales. This allowed BBAC to become the largest Mercedes-Benz passenger car production plant worldwide in terms of output in 2017, driven by the outstanding market demand for premium cars of the three-pointed star. Employing over 11,000 staff, BBAC’s portfolio includes the C-Class, E-Class, GLA, and GLC vehicles. In 2017, Daimler and BAIC announced a joint investment of five billion RMB (about 655 million euro) for Battery Electric Vehicles and battery localization at BBAC as part of the electric initiative. The first model from Mercedes-Benz’s EQ brand, the EQC SUV, is scheduled to roll-off production lines by 2019.

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