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Daimler Redoubling Efforts to Make up Lost Ground in China

German maker spending $2.7 billion to catch rivals.

by on Aug.29, 2013

Daimler's China chief, Hubertus Troska, recently laid out the company's plans to grow sales in China.

Daimler AG, in a bold effort to catch its German rivals Audi and BMW, plans to sink $2.7 billion in China, starting with a new plant.

The plant is scheduled for completion as early as 2014 and will help Daimler double China production to more than 200,000 units a year, according to Hubertus Troska, who was appointed last fall to reorganize the company’s China operations. Since then, he merged the company’s two distribution arms in China and set up a support unit to coordinate marketing, sales and training initiatives in the country.

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China is set to become Daimler’s largest market as soon as 2015, Troska said. (more…)

China Soon to Be World’s Top Luxury Car Market

Sales of premium models expected to double by 2020.

by on Jun.04, 2013

The new Cadillac XTS gets a splashy launch during China's annual auto show.

It would be tempting to say that James Wang is living the American dream – if it weren’t for the fact that he’s living in Beijing.

The mild-mannered 27-year-old is a self-made mega-millionaire, earning his money building golf courses for the country’s fast-growing leisure class. And like so many of his American counterparts, the young entrepreneur is addicted to automobiles, with a fleet of vehicles ranging from a Subaru WRX STi to a Porsche 911 and even a Maybach M62 in his garage.

While Wang may have a slightly larger personal fleet than most Chinese motorists he’s far from unusual in his taste for premium automobiles.  Luxury cars today fill the streets of many booming Chinese cities, notes Fu Qiang, president and CEO of Volvo Cars China, noting that “All the forecasts call for China to become the world’s largest premium market by 2016.”

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The country is already the largest national automotive market in the world, pushing past the U.S. several years ago. And Chinese industry groups have estimated overall annual demand could surge to 38 million in little more than a decade, exceeding sales in the U.S. and the European Union combined.

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Mercedes Increasingly Desperate to Reverse Losses in China

Share slips as Audi, BMW come on strong.

by on Apr.10, 2013

The Mercedes CLA Concept debuting in Beijing last year. The production version could be critical for the maker's revival in the Chinese market.

Mercedes-Benz continues to lose ground in China’s booming premium car market to arch-rivals BMW and Audi — but Daimler AG’s top executive, Dieter Zetsche, told the company’s shareholders meeting the automaker is confident it can make up the ground it has lost in recent months.

Mercedes’ slide has been both acute and unexpected and the maker has struggled even after slashing prices on key models such as the flagship S-Class sedan. That’s particularly worrisome since many analysts expect China will soon become the world’s largest market for luxury vehicles, surging past the U.S.

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Zetsche admitted to shareholders that Daimler management is keenly aware it has failed to keep pace with the growth in China. “Our sales had increased rapidly for five years in a row. During that period we posted the strongest average growth of all the premium brands there. Last year, our business expanded only slightly and we lost market share. We have to change this situation and we will.”

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China Set to Become Globe’s Top Luxury Car Market

But there could be unexpected obstacles.

by on Mar.06, 2013

Mercedes opened the world's first standalone AMG Performance Center in Beijing.

Demand for luxury vehicles in China will make it the world’s second-largest market for expensive vehicles by 2016, and number one by decade’s end when it will likely surpass the U.S., according to a new study by the consulting firm of McKinsey & Co.

But industry analysts and planners caution that several obstacles could delay or completely short-circuit the boom in automotive demand in China, both on the mainstream and luxury level.

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Sales of premium vehicles will probably equal that of all of Western Europe by 2020, as incomes continue to rise in what is now the world’s second-largest economy, according to McKinsey & Co. China is already the largest automotive market in the world overall.

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Daimler Ups Ante on China

Maker takes major stake in Chinese partner.

by on Feb.04, 2013

The Mercedes-Benz CSC concept at last year's Beijing Motor Show.

After suffering a series of setbacks in the world’s largest automotive market last year, Daimler AG isn’t planning to let that happen again. It has already shaken up its management team and now the parent of Mercedes-Benz is taking a major stake in its Chinese partner.

Daimler will invest $875 million for a 12% share of BAIC Motor, a subsidiary of Beijing Automotive Industries Corp. BAIC produces Mercedes vehicles for the Chinese market. The investment appears to be a first step towards a planned initial public offering by BAIC Motor, according to Chinese auto industry observers.

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“Our investment is a strong sign of the increased level of trust and cooperation between our two companies and clearly emphasizes the long-term commitment to a joint successful future,” said Dieter Zetsche, who serves as both CEO of Daimler AG and its Mercedes-Benz brand.

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Desperate for Turnaround, Daimler Names New China Chief

Mercedes slipping behind rivals in booming Asian market.

by on Dec.14, 2012

Daimler's new China chief, Hubertus Troska.

Daimler AG, in a move underscoring the growing importance of China to the company’ future, has named a new chief executive in charge of its operations in China and appointed him to the company’s Board of Management.

Hubertus Troska, 52, will become chief executive officer and Chairman of Daimler Northeast Asia responsible for all of Daimler’s strategic and operating activities in China.

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The timing is particularly significant considering the company has slipped in sales behind arch rivals Audi and BMW. Mercedes has had to resort to sometimes massive incentives to prop up its products this year.

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Lincoln Heading to China

Ford takes first step towards going global.

by on Aug.28, 2012

CEO Alan Mulally is targeting big growth in China for both the Ford and Lincoln brands.

Hoping to give its long-troubled luxury brand some new momentum – and much-needed economy of scale – Ford Motor Co. will launch Lincoln into the Chinese market in 2014.

The announcement – which confirms a report on TheDetroitBureau.com earlier this month – will come as a critical step for Lincoln, once one of the most powerful luxury nameplates.  Even though the century-old Lincoln has never been sold in China, Ford research suggests it has significant potential in what is rapidly coming to rival the U.S. as the world’s largest high-line automotive market.

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“Lincoln’s introduction to China represents a significant step forward in Ford’s aggressive growth strategy for the country,” Dave Schoch, Chairman and CEO of Ford Motor China, said during an event at a converted temple in Beijing.

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Cadillac To Build 3 Models in China

Maker goes local to boost demand in big luxury market.

by on Apr.13, 2012

Cadillac will begin building the new XTS in China.

General Motors is preparing to build three new Cadillac models in China – including its all-new XTS flagship — with the help of its principal Chinese partner, Shanghai Automotive Industry Corp. or SAIC.

The cars are expected to compete for high-end Chinese buyers, particularly in major Chinese cities such as Beijing and Shanghai, who have already shown a willingness to spend lavishly on European luxury cars despite some of the world’s most expensive licensing fees.

The new Cadillac XTS, which replaces the old STS, will be the first of the three Cadillac models to go into production in China.  It will target such competitors as the BMW 7-Series and Mercedes-Benz S-Class.  Demand for premium luxury models has been especially strong among wealthy Chinese buyers and communist party functionaries – particularly products that offer roomy and well-equipped back seats, like the XTS.

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Jaguar Land Rover Teaming up with China’s Chery

Too little too late?

by on Mar.22, 2012

Jaguar and British sibling Land Rover have inked an alliance with Chery Automobile to produce cars in China.

British maker Jaguar Land Rover is the latest to ink a deal with a Chinese partner – but with signs the Chinese market may be slowing, the question is whether the move is too little too late.

The new partnership with China’s ambitious Chery Automobile Company will lead to the production of both Jaguar and Land Rover vehicles, as well as powertrains, at a facility in the booming Asian market – which has outsold the U.S. for the last several years.

But the specifics have yet to be announced and will be subject to approval by Chinese regulators – a process that can drag on for some time.  Fuji Heavy Industries has been waiting since last year for the go-ahead on a deal that would lead to production of its Subaru line in China.  Nonetheless, officials at India’s Tata Motors, which owns JLR, expressed optimism.

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“Demand for Jaguar and Land Rover vehicles continues to increase significantly in China and we believe that JLR and Chery can jointly realize the potential of these iconic brands,” Jaguar Land Rover CEO Ralf Speth, said in a statement.

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Is China’s Car Market About to Stall?

Sales to miss government’s already modest expectations; margins also softening.

by on Mar.22, 2012

Mercedes is reportedly slashing prices by as much as 25% in China.

At a time when the world auto industry was ready to collapse, the Chinese market offered a rare and desperately sought beacon of hope.  Even as demand in the U.S. market plunged to its lowest levels in decades, China continued to deliver double-digit growth, propelling the emerging market to global sales leadership.

Ironically, as the U.S. market recovery begins to heat up, China is showing signs of an unexpected slowdown – one that is proving particularly worrisome in the luxury segment, and which could slam manufacturers like Mercedes-Benz, BMW and Audi who have counted on China for a disproportionate share of their profits in recent years.

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For the year-to-date, Chinese light vehicle sales are down a notable 4.4%.  The China Association of Automobile Manufacturers now predicts overall sales will only grow by about 5% for the full year – missing the government’s goal of 7%.  By global standards, that’s nonetheless significant – but put into perspective it’s clearly worrisome when one recalls recent annual growth rates that, at times, approached 100%.

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