Mercedes-Benz, the German firm founded by the inventors, is investing more in its cutting-edge research capabilities and design capabilities in China, as the centre gravity shifts eastwards.
Mercedes-Benz is expanding its presence in Shanghai and Beijing in an effort to make a home away from home. This is in line with regulations and consumer trends in a market that is larger than the United States and Germany.
Three years after first announcing plans for strengthening its research and development (R&D), the luxury car brand Daimler will now unveil its new Tech Center China, which it has built in Beijing.
Reuters spoke to four people who are familiar with the company‚Äôs new China strategy. They were close to the brand’s tech centre and its Chinese design studio. They are not allowed to talk to the media so they declined to identify themselves.
The new tech center, which employs more than 1,000 engineers, is three times larger than the one Mercedes-Benz opened in 2014. It is also the first outside Germany to be able to test “everything”. According to a source close, it is technically more “on par” with the much larger R&D headquarters near Stuttgart.
Mercedes-Benz also invested heavily in upgrading its Chinese design studio. The entire team was moved from Beijing to Shanghai, a metropolis of approximately 25 million people, which is known as the “car design capital” of China.
Mercedes-Benz has every reason to expand its Chinese operations.
Despite the pandemic, China’s car sales jumped by 12% to a record 774,000 last year. This is a lot more than its next two markets, Germany (286,000) and the United States (275,000.
It sold about 80% of its cars in China, often with a variety of China-only features. Asia accounted for nearly half of its global sales in 2021.
China’s auto market is the largest in the world, and it is expected to continue growing steadily. Demand is forecast to reach 35,000,000 vehicles by 2030, compared to 25 million currently.
‘SECOND HOME’
Mercedes-Benz is being pressured by local EV startups like Xpeng Li Auto and Nio, who have stylish vehicles that are tailored to Chinese consumers.
According to four sources, the German carmaker’s strategy for China’s “second home”, is designed to make its design and technology more flexible, to adapt quickly to changing landscapes and to solidly establish the Mercedes-Benz brand.
“The expectation in China is for the in-car experience, to be served by a localised, digital services ecosystem,” Bill Russo, chief of consultancy Automobility Ltd, Shanghai.
Customers of Mercedes-Benz in China are on average 36 years old, which is roughly 20 years less than in Germany. They are also more tech-savvy than in Germany, but are also more loyal, switching brands as trends change.
Mercedes spent 1.1 billion Yuan ($170 Million) to upgrade the centre. The majority of the investment will allow Mercedes to do a variety of testing locally, rather than sending new technologies back home to the Sindelfingen headquarters.
According to a source close to the tech center, “A key reason for expansion is to gain proximity to these customers and their requirements.” Source: “Here, everything we need to fully test the car is here.”
Two sources confirmed that the centre has modern chassis testing benches as well as others for noise, vibration, and harshness. It also has batteries and e drive powertrains. The centre can swap in new ones as technology advances, and they have flexibility to do so.
Mercedes also added functions that were important to Chinese customers, like a team dedicated intelligent, connected e-mobilisers.