August 27, 2009 / 11:37 AM / 10 years ago

Daimler revs up China sales, to expand capacity

BEIJING (Reuters) - Car sales in China at Daimler AG’s (DAIGn.DE) Mercedes-Benz division accelerated in July and the company is planning to expand its local manufacturing capacity, a senior executive said on Thursday.

Mercedes-Benz sold 31,711 cars in China in the first seven months, 49 percent more than in the same period last year, Ulrich Walker, head of the German automaker’s Northeast Asia operations, told reporters.

In the first six months, sales growth was up 40 percent, a pace that Walker said he was aiming to maintain over the rest of 2009.

“At the moment, we have good prerequisites to be as successful as in the first half,” he said.

China’s total passenger car sales jumped 70.5 percent in July from a year earlier as government stimulus measures, including a halving of sales tax on small cars and subsidies for rural buyers, boosted consumer confidence.

Walker said he hoped the launch of the new Mercedes-Benz top-end S-class series would underpin sales momentum.

China is currently the top market in the world for sales of the S-Class, the marque’s flagship sedan.

Daimler said it had also sold 900 Smart models since the small car was launched in China in April.

The company was also increasing auto financing to help bolster sales, Walker said.

Daimler makes Mercedes-Benz sedans in partnership with Beijing Automotive Industry Holding Corp (BAIC).

The capacity of the Beijing plant, currently 25,000 vehicles a year, would be increased so it could launch production of a new E-class model in the middle of 2010, including an extended version for the local market, Walker said.

He brushed aside as “speculation, rumours” reports of a joint venture between Daimler and Brilliance China Automotive Holdings (1114.HK) to make special purpose vehicles in China.

“I know everything about China in Daimler, so ... from my point of view that’s not right,” he said.

On August 3, an executive of the parent company, Brilliance Auto, said the shareholding structure and size of the venture had not been finalised, but a deal could be reached before the end of the year.

Walker said such a venture would not make strategic sense because Brilliance, the country’s eighth-largest carmaker, is a partner of Mercedes-Benz rival BMW (BMWG.DE).

Brilliance makes BMW 3 series and 5 series sedans in the northeastern Chinese city of Shenyang.

Reporting by Jason Subler; Writing by Alan Wheatley; Editing by Rupert Winchester

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