Mercedes-Benz Plans $2 Billion Joint Investment in China to Regain Lost Ground

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Mercedes-Benz, BMW and Audi took a sales hit in China in the first half of this year, with Mercedes-Benz registering the biggest sales drop of 9% among the three. Photo: VCG

Mercedes-Benz Group AG, alongside two local partners, plans to invest more than 14 billion yuan ($2 billion) to diversify its product lineup in China, in a renewed effort to strengthen its foothold in the world’s largest auto market, where homegrown brands are gaining traction amid an electric-car frenzy.

Around 10 billion yuan of the capital will be earmarked for expanding its passenger car business, with the remaining funds used to support the development of its light-weight commercial-focused vehicle business, the German auto giant said in a statement on Wednesday.

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Mercedes-Benz and partners plan a $2 billion investment in China, focusing on expanding passenger and lightweight commercial vehicle businesses.
New models targeting the Chinese market will start production in 2025, including electric long-wheelbase vehicles and luxury MPVs.
This investment aims to enhance Mercedes-Benz's presence in high-end manufacturing and EVs amid intensifying competition from local brands.

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Who’s Who

Mercedes-Benz Group AG: Mercedes-Benz Group AG plans to invest over 14 billion yuan ($2 billion) in China with local partners to expand its passenger car and light commercial vehicle businesses. From 2025, new models tailored for China will be produced, including electric vehicles. The investment aims to strengthen its position in the Chinese market as local brands gain market share. Mercedes-Benz also plans to debut its MB.OS in-car operating system in China next year.

Beijing Benz Automotive Co. Ltd.: Beijing Benz Automotive Co. Ltd. is Mercedes-Benz's China joint venture with state-owned BAIC Motor Corp. Ltd. They plan to start producing vehicles based on the new Mercedes-Benz Modular Architecture (MMA) from 2025, including the electric CLA model. This JV is part of Mercedes-Benz's strategy to expand its presence and diversify its product lineup in the Chinese market.

BAIC Motor Corp. Ltd.: BAIC Motor Corp. Ltd. is a state-owned Chinese automotive company and a joint venture partner of Mercedes-Benz in the Beijing Benz Automotive Co. Ltd. This joint venture will produce vehicles on the new Mercedes-Benz Modular Architecture (MMA) from 2025, including the electric CLA model.

Fujian Benz Automotive Co, Ltd.: Fujian Benz Automotive Co, Ltd. is Mercedes-Benz's joint venture in China with Fujian Motor Industry Group Co. Ltd. Part of the investment will be allocated to this venture to produce luxury electric multi-purpose vehicles (MPVs) based on the VAN.EA platform, engineered for Mercedes-Benz's next generation of electric vans.

Fujian Motor Industry Group Co. Ltd.: Fujian Motor Industry Group Co. Ltd. is a partner in Mercedes-Benz’s China joint venture, Fujian Benz Automotive Co. Ltd. This JV will use part of a $2 billion investment to produce luxury electric MPVs based on Mercedes-Benz's VAN.EA platform.

BMW AG: In April, BMW AG announced plans to invest an additional 20 billion yuan in its Shenyang plant in Northeast China. This investment aims to prepare for the production of its next-generation Neue Klasse line of electric vehicles (EVs), which is set to start from 2026.

Audi AG: In May, Audi announced plans to collaborate with Shanghai-based state-owned SAIC Motor Corp. Ltd. to jointly develop premium electric smart cars on a China-specific platform, with the first model expected to launch in 2025.

SAIC Motor Corp. Ltd.: SAIC Motor Corp. Ltd. is a Shanghai-based state-owned automotive company mentioned as a partner of Audi to jointly develop premium electric smart cars. Their collaboration is set to produce a China-specific platform, with the first model expected to market in 2025.

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What Happened When

First half of 2024：: Mercedes-Benz, BMW AG, and Audi AG took a sales hit in China, with Mercedes-Benz registering the biggest sales drop of 9% among the three.

From January to July 2024：: Chinese carmakers sold a combined 8.74 million passenger vehicles in China, accounting for 62.6% of total passenger cars sold during the period.

April 2024：: BMW unveiled plans to invest an additional 20 billion yuan in its Shenyang plant in preparation for the production of its next-generation Neue Klasse line of EVs set to start from 2026.

May 2024：: Audi announced plans to work with Shanghai-based state-owned SAIC Motor Corp. Ltd. to jointly develop premium electric smart cars built on a China-specific platform, with the first model expected to hit the market in 2025.

Wednesday, 2024-09-04：: Mercedes-Benz Group AG announced plans to invest more than 14 billion yuan ($2 billion) to diversify its product lineup in China.

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