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Daimler AG and its Chinese partner BAIC Motor Corporation 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.

Daimler said that the agreement will help it strategically strengthen its local footprint, and that it shows the company’s strong commitment to China and its strategic partner, BAIC. Daimler and BAIC Motor will invest a total of approximately €4 billion (US$5 billion) in their joint venture BBAC by 2015, including the new pledge of €1 billion (US$1.26 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, the cornerstone of which was laid in September 2012.

Daimler and BAIC 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% 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 centers in the world provides component and vehicle testing while supporting all production tests as well as future localization.

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.

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