BAIC Moto Corporation and its German partner Daimler AG recently signed an agreement on the localization of the upgraded version of Mercedes-Benz’s luxury compact car models, Beijing Daily reported.

Daimler and BAIC Moto will invest a total of approximately €4 billion in Beijing Benz Automotive Co. (BBAC) by 2015. The GLA-Class compact SUV will go into production early next year.

Dr Dieter Zetsche, chairman of the Board of Management of Daimler AG and head of Mercedes-Benz Cars, said that this strategic investment will pave the way for Mercedes-Benz’s sustainable growth.

Xu Heyi, chairman of the BAIC Group, noted that the agreement shows BBAC has reached new heights in terms of R&D, manufacturing, and management capabilities. BBAC has increased confidence in "Made in China" automotive products.

The past decade has witnessed great results in the BAIC Motor and Daimler partnership, not only for passenger cars but also trucks. The models BBAC is now producing are the long-wheelbase E-Class, the long-wheelbase C-Class, and the GLK-Class. The all-new long-wheelbase C-Class cars came off the production lines just this July.

The production capacities will be more than doubled to over 200,000 units per annum in 2015. The localization of the GLA-Class compact SUV has already been implemented. The model will be launched in the market next year.

According to Daimler’s plan, it aims to increase Mercedes-Benz’s sales volume to surpass BMW and Audi and make it the number one luxury motor vehicle brand by 2020. The Chinese market is crucial for Daimler’s leadership.

BBAC has been launching a new model each year and has achieved systematic production. With a production capacity of 400,000 motor vehicles and 500,000 engines, China has become Mercedes-Benz’s largest overseas production base.

After the long-wheelbase C-Class cars came off the production line, the rate for the brand’s localization has reached 60 percent. Purchasing main accessories locally greatly improves BBAC’s competency.

Mercedes-Benz’s sales volume in the Chinese market broke through 1.2 million late September. The number of its domestic dealers is growing with an improvement in BBAC’s production capacity. Around 100 new dealers will join the sales network by the end of this year.

In the first eight months of this year, Mercedes-Benz has achieved a sales volume of over 170,000 in China, an increase of 30 percent year on year. Mercedes-Benz has also become the most rapidly growing brand in the Chinese luxury motor vehicle market. More than half of its sales volume was contributed to by localized models.