Daimler Spends €2 Billion to Revive Mercedes in China

Daimler AG plans to invest €2 billion over the next two years to revitalize the sluggish Chinese operations of its Mercedes-Benz Cars unit.

The spending will help Mercedes achieve a number of previously announced goals for China by 2015, according to Daimler. Those targets include doubling production to 200,000 vehicles, boosting sales by one-third to more than 300,000 units, increasing local content to as much as 70% from 50% and introducing 20 new or revamped models.

The company's China chief Hubertus Troska says hiking output in the country will allow Mercedes to be more nimble in responding to local demand and reduce costs by avoiding the country's 25% tariff on imported cars.

The increase in output will come from the second phase of Daimler's assembly plant near Beijing, which is expected to open in 2015. At the same location, the company is erecting factories to make engines and the Mercedes GLA compact crossover. Those facilities are scheduled to open in the fourth quarter of this year and early 2015, respectively.