Daimler said it will pay 640 million euros ($875 million) for 12 percent of BAIC Motor, a unit of Beijing Automotive Industries Corp., with which it manufactures Mercedes-Benz cars.
Daimler said the investment was in preparation for a possible initial public offering (IPO) by BAIC Motor in the future.
The agreement includes that Daimler will receive two seats on the Board of Directors of BAIC Motor. The two companies also agreed that BAIC will increase its stake in the production joint venture Beijing Benz Automotive Company (BBAC) by 1% to 51% and will thus be able to consolidate this joint venture within BAIC ahead of its IPO. At the same time, Daimler will increase its stake in the integrated sales joint venture Beijing Mercedes-Benz Sales Service Co. by 1% to 51%.
As one of China’s largest automakers, BAIC Group sold over 1.5 million vehicles in 2011. Daimler AG is one of the world’s most successful automotive companies.
Both parties have already established a long-term strategic and trustful partnership, including significant investments in the Chinese automotive industry over the past years. Joint activities include BBAC, which has been producing Mercedes-Benz passenger cars since 2006, Beijing Foton Daimler Automotive Co., Ltd. (BFDA), which has been jointly manufacturing Auman-branded medium- and heavy-duty trucks since mid-2012, and most recently, the establishment of Beijing Mercedes-Benz Sales Service Co., Ltd.
China is now the No. 3 market for Daimler's Mercedes-Benz unit after the United States and Germany, but it trails BMW and Volkswagen's luxury brand Audi.
Mercedes-Benz's sales in China climbed 4 percent to 206,150 cars in 2012, about half of what Audi delivered. BMW's sales last year rose 41 percent to 326,444 cars.
German luxury automaker Daimler AG announced it is buying a stake in BAIC Motor, the passenger car unit of its main Chinese partner, to expand its presence in the world's biggest auto market.