Mercedes-Benz to outline strategic plan for China

Daimler AG's Mercedes-Benz will launch about 20 new or upgraded car models in China over the next two years, part of a broader turnaround effort aimed at reversing the brand's recent struggles in the world's biggest auto market.

The plan, a key component of Mercedes' broader "2020 initiative", aims to boost sales of Mercedes-Benz cars in China by a third to more than 300,000 cars a year by 2015, according to two individuals familiar with the matter.

Daimler's new China chief, Hubertus Troska, and his management team are expected to unveil details of the plan, which also includes expanding manufacturing capacity and the sales network, in Beijing and Chengdu this week.

If the sales target were achieved it would make China the brand's biggest market globally, said the sources, who spoke on condition of anonymity. Last year Mercedes-Benz sold slightly more than 200,000 cars in China, currently its No 3 market behind Germany and the United States.

Troska's turnaround initiative will kick off with the China launch of a significantly redesigned E-class sedan on Friday at an auto show in the southwestern city of Chengdu.

That will be followed quickly by a China launch of the overhauled flagship S-class sedan during the third quarter of this year, as well as a more affordable small sport-utility vehicle (SUV) called the GLA next year.

Struggling for traction

Mercedes-Benz has struggled in China since the start of 2012, when overall demand for luxury cars began weakening amid an economic slowdown in the world's second-largest economy that affected luxury car brands in general.

Mercedes fared worse than most because of a dearth of new or redesigned models and what industry insiders and key operators of Mercedes-Benz dealers described as a short-sighted volume grab that hit the brand's profitability.

Mercedes-Benz's sales rose just 4 percent to 206,150 cars, last year. By contrast, sales of Audi cars rose 32 percent to 407,738 cars, while BMW's volume increased 41 percent to 313,638 cars, according to consulting firm LMC Automotive.

BMW and Audi posted impressive gains, but they were also accused by dealers and analysts of boosting sales through heavy discounts and other costly incentives.

With China's economy still slowing compared with the breakneck pace of expansion over the past 15 years, there remains some doubt over whether Mercedes-Benz is going to be able to boost its sales by a third by 2015.