Mercedes making aggressive plans for Chinese market

Wed, 28 Aug 2013

Mercedes-Benz is preparing a major product offensive to counteract lagging sales in the Chinese market, aiming 20 new or updated models at the People's Republic in the next two years, according to a report by Reuters. The plan is part of MB's so-called 2020 Initiative, which will see the Stuttgart-based manufacturer dump 2 billion Euros ($2.67 billion) into its Chinese market vehicles in a bid to boost sales to 300,000 units by 2015.

Were it to succeed, China would become the largest market for the Silver Arrow, outpacing Germany and the United States. Leading the charge will be the redesigned E-Class, which is set to launch in China this week. That will quickly be followed by the S-Class, and eventually by the GLA-Class in 2014.

Mercedes has struggled in China, especially relative to its German competition, BMW and Audi. Where Mercedes saw a mere four-percent increase in 2012 sales to 206,150 units, Audi was up a staggering 32 percent, while BMW's numbers jumped 41 percent. While some voices, according to Reuters, accuse Munich and Ingolstadt of boosting their numbers through hefty incentives, the fact remains that Mercedes was just walloped by its competitors last year.

Besides new and refreshed vehicles, Mercedes is also aiming to produce 70 percent of the cars it sells in China inside the People's Republic. Naturally, in-country production will save Mercedes a boatload, which in turn lowers prices and boosts sales without incentivizing vehicles. Leading the charge will be the new GLA, which is slated for production at a joint-venture facility outside of Beijing. We wouldn't count on the S-Class to start Chinese production, but there are plenty of high-volume models that Mercedes could build in China, not least of which is the GLA's platform mates, the CLA- and A-Class.

The idea of Chinese-built Mercedes may be nothing short of controversial, but the brand's new boss in China, Hubertus Troska, isn't concerned, telling Reuters, "The quality of vehicles and engines you get out of our Chinese production is to the same identical levels of quality ... as our cars being produced in Germany."

By Brandon Turkus