SHANGHAI -- Daimler AG has begun building a "stretched" Mercedes-Benz E-class sedan in China in a bid to win consumers drawn to long-wheelbase sedans from German rivals BMW and Audi.
In Beijing, Daimler's joint venture with Beijing Automotive Industry Holding Co. makes the C-class sedan and now a long-wheelbase E class, called the E300L, which goes on sale in July.
Anticipating strong sales of both models, Beijing Benz has tripled annual production capacity to 100,000 units.
More than 40 percent of the components are locally sourced; by 2013 that percentage will increase significantly when Daimler's new engine plant begins production.
The new engine plant will make four-cylinder gasoline engines for vehicles built at Daimler's two joint ventures in China. E-class customers in China will get a choice of a 204-horsepower or a 245-hp gasoline engine.
That facility will be located at the Beijing Benz Automotive Co. complex in Beijing.
Mercedes Benz will source more than 500 parts from China for the locally made E class, said Guenter Butschek, CEO of Beijing Benz DaimlerChrysler Automotive Co.
Butschek says Daimler chose Chinese suppliers with the quality and resources to supply Daimler factories around the world. Chinese-made components such as radios and wire harnesses already are exported to Daimler assembly plants in Alabama in the U.S. and Germany.
Last summer, Mercedes began importing the E300 into China. The imported E-Class sedan's price ranges from 618,000 ($90,500) to 668,000 yuan ($98,000).
In 2009, the company sold 12,000 units, and sales are up sharply so far this year. In the first four months, Mercedes sold 8,063 E300 sedans, outselling the less expensive C-class sedan (7,803 units).
Mercedes has not yet announced prices for the E300L.
BMW, Audi competition
According to Mercedes, the traditional buyers of its cars in China are young business executives with an average age of 39 years.
The E 300L is 140 mm longer than the standard 5012mm sedan, and it has been developed specifically for the China market where executives prefer to use chauffeurs. The rear seat has added legroom. And if passengers want even more room, they can use controls in the rear compartment to slide the front seats forward.
Mercedes' new sedan faces tough competition. Audi AG, China's leading luxury brand, is selling a long-wheelbase version of the A6 sedan. In the first four months, Audi sold 38,605 units, up 27 percent over the same period last year. That's nearly five times the sales volume of Mercedes' rival E-class.
Meanwhile, BMW AG has sold 10,461 units of the 5-series sedan, up 46 percent over the year-ago period.
Daimler declined to offer a sales forecast for the E-class sedan this year. But they estimate that its market segment will generate industry sales of 200,000 units in 2010, up from 100,000 units last year.