(Bloomberg) -- Mercedes-Benz Group AG’s chief executive officer is in China this week on a mission to expand local technology partnerships that could help the luxury carmaker turn around a sales decline in the market.
Ola Källenius, who has made multiple trips to China this year, is traveling to Beijing with other management and supervisory board members, according to people briefed on the plans. The goal is to make Mercedes’ new electric vehicles more appealing to Chinese consumers, the people said, asking not to be named as the discussions are private.
The new ties are set to target the 2025 launch of its next-generation EV, the people said, seen as crucial in the fight to recover market share from Chinese automakers.
Partnerships with local firms producing maps or in-car entertainment are meant to make the battery-only CLA — the first model that will be released on the company’s new electric architecture — more desirable to Chinese consumer.
A representative for Mercedes in China confirmed a planned visit from headquarters staff, declining further comment.
Mercedes is under pressure to reignite momentum in its biggest market, which contributed 36% of sales last year. Last week, the German maker of the S-Class sedan followed rival BMW AG in cutting its full-year profit outlook after consumers held back on luxury-car purchases in a stagnant Chinese economy. With local competition intensifying, Mercedes and its peers have seen a reliable stream of earnings start to decline.
Part of Mercedes’ response to the tougher environment is a sales offensive with new products, Källenius said last week on a call with analysts.
Mercedes last month announced one such a local with ByteDance Ltd., the owner of video service TikTok, to provide generative artificial intelligence applications that can be used for in-car systems in China.
Källenius may also meet with top shareholder Li Shufu, chairman and founder of Zhejiang Geely Holding Group Co., while in China, some of the people said. A Geely representative declined to comment.
During the CEO’s most recent trip to China, Mercedes announced a 14 billion-yuan ($1.99 billion) joint investment with local firms, including longtime partner BAIC Motor Corp., to produce passenger and light-commercial vehicles tailored to the Chinese market. Those include the electric CLA, which will also have a longer wheelbase, a GLE sport-utility vehicle, and a new luxury battery-electric multi-purpose model.
Germany’s Volkswagen AG has also accelerated its localization plans in China, targeting faster production and development while optimizing costs through local supply chains.
VW has partnered with Chinese EV startup Xpeng Inc. to roll out new products in China, while investing in new joint ventures with local suppliers such as Horizon Robotics.
--With assistance from William Wilkes.
©2024 Bloomberg L.P.
