Manufacturing News

Daimler opens Beijing r&d center to study Chinese tastes

Daimler AG has opened an r&d center in Beijing tasked with further tuning Mercedes-Benz to wealthy Chinese tastes and closing the sales gap with Audi AG and BMW AG.

The German automaker's move demonstrates a desire to "embed us more deeply in China, to make cars best suited to China," Hubertus Troska, Daimler's China head, told Reuters.

Daimler is expanding Mercedes in China at a time when an investigation into anti-competitive practices in the auto industry is prompting carmakers to lower prices. Mercedes has said it was cooperating with an investigation into unspecified matters.

The new r&d center nevertheless signals commitment to a market Troska said would become Mercedes' largest in one or two years. With that in mind, the automaker plans to raise its staff of engineers and other specialists in Beijing to 500 by the end of next year from 350.

A logical step
"It is a logical step to better understand the market and make sure Chinese requirements are properly regarded early in the process when we develop a next generation of cars," Troska said in an interview last week.

The r&d center caps a series of moves Troska has made since becoming chief of China operations. Since 2012, he has reorganized marketing and sales and expanded Mercedes' dealer network. The r&d center's focus on Chinese tastes should help Mercedes catch up in the local luxury car segment with Audi and BMW, he said.

LMC Automotive expects Mercedes will sell 291,000 vehicles in China this year, compared with 581,000 for luxury market leader Audi and 448,000 for second-place BMW.

Troska said new nameplates such as the GLA compact crossover should help Mercedes sell "significantly more than 300,000 units next year." In 2015, LMC Automotive forecasts Mercedes will sell 386,000 vehicles.

Younger drivers
Daimler has invested 110 million euros (841.4 million yuan) in the r&d center and in another center it recently opened in Beijing with local partner BAIC Motor Corp.

Such investments are more than appropriate, Troska said, given the "growth potential in China is unique."

Automobile sales growth in China has slowed in recent months in tandem with a slowdown in the overall economy. But automakers estimate overall annual demand will be as many as 35 million vehicles by 2020, up from 22 million units last year.

Among the r&d center's more immediate tasks is to tune in with Mercedes' Chinese customers. The typical Chinese Mercedes buyer is 38 compared with Germany where the average customer is 20 years older, a company spokesman said.

High on the wish list of these younger buyers is in-vehicle Internet access, Troska said.

Other features popular with wealthy Chinese include spacious back seats, advanced entertainment systems and climate control, because many customers have chauffeurs and drive themselves only on weekends.

Also as part of its China focus, Mercedes is considering a new super premium car built with the Chinese consumer in mind, Troska said.

The flagship "S class is uniquely positioned and has a tradition also in China as being a top-of-the-line boss' car. Is there an opportunity to position even the S class slightly higher? I think there is," Troska said. "You will very soon hear about it."

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