Daimler has announced a joint venture company to be named Beijing Benz Automotive Co, Ltd. (BBAC). Together with its Chinese partner Beijing Automotive Industry Corporation, about 2 billion euros will be invested in the new joint venture.

The agreement covers local production for the Chinese market of the the GLK SUV and three models of the upcoming generation of Mercedes-Benz compact cars. Meanwhile, production capacities for the capacities for the C- and E-Class will be expanded from the current 80,000 units, depending on demand.

Along with an R&D center, a new engine plant for 4-cylinder gasoline engines will also be put up in two years, which will supply the engine needs of Mercedes cars and vans that will be produced in China. Projected capacity for this plant will be up to 250,000 units.

Said Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars, “With this framework agreement, we are laying the essential strategic foundations for our long-term and significant participation in the growth of the key market China. The projects agreed upon are further central elements of our China strategy for the sustainable development of our business. As early as 2020, at least one in five premium compact cars is expected to be sold in China. In the light of this enormous growth potential, we are resolutely switching to attack mode with the local production of our new compacts.”