China is expected to be Daimler AG's biggest market by 2015, and the German automaker promised to increase investment in the country by 3 billion euros (US$4.2 billion), said the company head.

Dieter Zetsche (left), CEO of Daimler AG, Gou Zhongwen (center), vice-mayor of Beijing, and Ulrich Walker, chairman and CEO of Daimler Northeast Asia, attend the launching ceremony of Mercedes-Benz's largest rotating three-pointed star outside Germany on top of the Daimler Tower in Beijing on Friday. [China Daily]

"We expect China to be our biggest market by around 2015. And it could be earlier if the market demand continues its robust increase as local GDP grows," said Dieter Zetsche, CEO of Daimler AG, on Friday.

"We plan to invest 3 billion euros - the biggest investment by Daimler in an overseas market - in China by 2015. The investment is at least three times what we've put into this market so far. In particular, we plan to sell 300,000 cars annually in the market by 2015."

He told China Daily that Daimler will use the massive investment to enhance its richest and most diverse product portfolio in the luxury sector. It will also expand its extensive dealership network, promote local research and development, and increase its corporate social responsibility investments to enrich the brand as well as benefit the local society.

China is now the third biggest market for Daimler, following Germany and the United States.

In the first three quarters of the year, it tallied more than 101,350 units of Mercedes-Benz cars to represent a record year-on-year increase of 129 percent, helping the three-pointed star surpass its 2010 sales target for the Chinese mainland in nine months. The high market demand has seen Daimler raise its sales target to more than 120,000 units in China for 2010, according to Zetsche.

He also told China Daily that Daimler's future success will be based on local production of both passenger cars and commercial vehicles.

"As 70 percent of our products now are imported, we plan to gradually increase the proportion of locally produced units to 70 percent by 2015," said Zetsche. "Thus, we are especially dedicated to maintaining investment to strengthen our production capacity and bring more locally produced vehicles to this market," he added.

Daimler is now producing two models in its venture Beijing Benz Automotive Co Ltd (BBAC), the E-Class and the C-Class. They ranked as the top volume leaders for Mercedes-Benz in the first nine months of the year.

Because of the anticipated demand for the C-Class and the new long-wheel-base E-Class, BBAC has tripled its capacity, increasing technically installed capacity for Mercedes-Benz to between 75,000 and 100,000 units each year.

Moreover, BBAC and its partners will invest around 200 million euros to build a new engine plant, which will be operational by 2013 and will produce four-cylinder petrol engines for all Daimler products in China, with an initial capacity of 100,000 units annually.

Zetsche said it is Daimler's first Mercedes car engine plant outside Germany.

Under the 600-million-yuan joint venture between Daimler and BYD Co, the Shenzhen based automobile manufacturer, a new electric vehicle will be created specifically for the requirements of the Chinese market, with a planned release date of 2013.

"We are still in the early stages of this partnership, but exporting this vehicle in the future is also part of our considerations," said Zetsche.

As the first and only international automotive manufacturer to successfully deepen its cooperation with China in all segments of the automotive industry, commercial vehicles are a significant part of Daimler's domestic strategy.

"Thanks to strong government investment and incentive programs, China's commercial vehicles market has maintained its strong growth momentum and Daimler is gradually becoming recognized as the best in not only exclusive passenger vehicles, but also cutting-edge commercial vehicles in China," said Ulrich Walker, chairman and CEO of Daimler Northeast Asia, in a recent interview with China Daily.

(China Daily October 23, 2010)