Mercedes takes SUV battle with BMW to China

By Marcel Michelson

BEIJING (Reuters) - Mercedes-Benz gave a peek preview of the GLK350 on Saturday, intended to challenge BMW's (BMWG.DE) X3 as the two German luxury carmakers take their fight to the booming Chinese market.

Both hope China offers enough wealthy clients to offset a general slowdown in the European and U.S. car markets.

"China is the second biggest market for the S-Class," Ulrich Walker, chairman of Daimler Northeast Asia, said of the top-line passenger car of the Mercedes brand.

He was speaking at a presentation ahead of the start of the Beijing Auto Show on Sunday where BMW, the world's biggest luxury car group, will also be out in force.

Walker said the Chinese market was set to top 10 million cars in 2008 after over 9 million in 2007.

The GLK350 is a sports utility vehicle marketed as dealing with bad roads while offering its occupants a cocoon of luxury.

The main German SUV lineup includes the X3, Audi (NSUG.DE) Q7, Porsche (PSHG_p.DE) Cayenne and Volkswagen (VOWG.DE) Touareg.

Among the SUVs, the GLK350 is a bit smaller and some media have described a concept of the model, the GLK Vision Freeside, as a baby-SUV.

This got a publicity coup at January's motorshow in Mo-Town Detroit through its use in a movie based on the television series Sex in the City. Mercedes-Benz executive vice president for marketing and sales, Klaus Maier, said the China launch was of the production model of the GLK.

Audi launched the Q5, its smaller SUV, at the Poly Plaza centre. Other smaller SUVs are the (Toyota) Infiniti EX, (Honda) Acura RDX, Volkswagen Tiguan, Land Rover LR2/Freelander and Volvo XC60.

The upmarket car subsidiary of Volkswagen AG (VOWG.DE) already has the bigger Q7.

Rupert Stadler, chief executive at Audi, said the company was on its way to breach the level of one million deliveries to customers in 2008 and sales in China were up strongly.

(Editing by Ruth Pitchford)