At home: Mercedes-Benz overtakes China


  • Mercedes-Benz to Unveil New Chinese Tech Center This Month
  • German automaker makes China a ‘home away from home’
  • Foreign manufacturers under pressure from Chinese startups
  • Mercedes-Benz moves all of its designers from China to Shanghai

BEIJING / SHANGHAI, Oct.11 (Reuters) – Mercedes-Benz, the German company founded by the inventors of the automobile, is devoting more resources to its advanced research and design capabilities in China as the center of gravity of the new automobile the world is moving east.

In an effort to create a “home-away-from-home”, Mercedes-Benz is doubling down on its bases in Beijing and Shanghai to stay ahead of regulations and consumer trends in an automotive market that overtakes the United States and Germany reunited.

Three years after initially announcing its intention to strengthen its research and development (R&D) in the country, the luxury car brand owned by Daimler (DAIGn.DE) will unveil its new Tech Center China in Beijing this month.

Reuters spoke to four people close to the brand’s Chinese technology center and design studio who are familiar with the company’s new Chinese strategy. All declined to be named because they are not authorized to speak with the media.

With 1,000 engineers, the new technology center is more than three times the size of the one Mercedes-Benz opened in 2014 and the first outside Germany to be able to “test everything”, which puts it technically more “on a par” with the much larger R&D headquarters. near Stuttgart, said a person close to the center.

Mercedes-Benz has also invested heavily in modernizing its Chinese design studio and moved the entire team from Beijing to Shanghai, a megalopolis of around 25 million people known as China’s automotive design capital.

Mercedes-Benz has good reason to increase its Chinese operations.

Its car sales in China jumped 12% last year to a record 774,000 despite the pandemic, streets ahead of its next two markets, Germany with 286,000 and the United States with 275,000 .

About 80% of the cars sold in China were made there as well, typically with an array of features and models only in China, and Asia globally accounted for nearly half of its global sales in 2021.

The Chinese car market, the world’s largest since 2009, is expected to continue to grow steadily, with demand forecast to reach 35 million vehicles by around 2030 compared to 25 million today.


But Mercedes-Benz, like all foreign automakers in China, is under increasing pressure from local electric vehicle startups such as Xpeng, Li Auto and Nio (NIO.N) and their sleek vehicles with high-tech features. suitable for Chinese consumers.

This is why the German automaker’s “second home” strategy for China is aimed at making its design and technology more agile, reacting quickly to the ever-changing landscape and firmly entrenching the Mercedes-Benz brand, the officials said. four sources.

“The expectation in China is for the in-car experience to be served by a localized digital service ecosystem, and such solutions need to be designed and built by people who live in China and truly understand mobile internet,” Bill Russo, responsible for the board. Automobility Ltd. in Shanghai, said.

Mercedes-Benz customers in China are on average 36 years old – about 20 years younger than in Germany – and more tech-savvy, but they’re also notoriously disloyal, going from brand to brand as trends change.

Mercedes spent 1.1 billion yuan ($ 170 million) to modernize the center, with much of the investment ensuring that it can perform a series of tests locally – rather than sending new technology back to the Sindelfingen headquarters. in Germany.

“One of the main reasons for the expansion is to be close to these customers and their needs,” said the person close to the technical center. “Here we finally have everything we need to fully test the car,” the source said.

The center has modern chassis test stands and others, including noise, vibration and harshness, as well as batteries and electric powertrains, and has the ability to swap out new ones as they go. as the technology develops, two sources said.

Mercedes has also added features deemed important for Chinese customers, such as a team dedicated to smart and connected electric vehicle (EV) technology.

“Tech-savvy customers here demand that you be very local in terms of intelligence, connectivity and autonomous driving,” one of the sources said.


The four sources said the focus on the customer in China in recent years is already paying off.

A desire to create colors only in China has led to research into the preferences of young buyers of luxury goods. While appreciative of being seen as trendy and tech-savvy, there has been a resurgence of interest in styles inspired by ancient Chinese dynasties.

As part of this research, the studio came up with “Rose Gold Metallic,” a variation of rose gold tones fitted for cars first used as the exterior color for the Mercedes-Benz AL-Class sedan in 2018. New ones Electric vehicles such as the EQA and EQB are now available in rose gold, and this is also an interior tone in the EQC.

“Global ideas, inspired by China,” a source close to the studio said, adding that if Mercedes is to respond to its Chinese customers first, some ideas developed in China will go global.

Part of the motivation for the studio’s move to Shanghai was the need to dramatically speed up the design process by making it more digital, as most of the virtual model making vendors are based there.

“Also, Shanghai is a much easier place to recruit design talent,” said the source close to the studio, which is just north of the city’s main waterfront district, the Bund.

Designers typically draw a car on paper or a touchscreen computer screen, and expert modelers then help sculpt the designs into models out of clay. Mercedes-Benz plans to more or less do away with these physical models.

As part of the new process, the Shanghai studio will revise their designs using virtual tools, with the exception of the occasional quarter-sized physical models, according to one of the four sources.

If the studio makes it to the final of the internal car design competitions, it will send designers and model makers to the main studio in Germany to create life-size models for the final round, the source said.


Daimler’s drive to boost its technological development in China also comes at a time when the cost of not keeping pace with Beijing’s policymakers has never been higher.

Beijing’s broad regulatory crackdown in recent months has erased billions of dollars from the value of some of the country’s best-known private companies and weighed on the auto industry.

This is in part because tensions between the United States and China have created a difficult environment for foreign companies wishing to import technologies developed elsewhere.

And from battery technology to new types of mobility, including smart connectivity and autonomous driving, Chinese policies and regulations are changing and evolving rapidly.

“If you react to the change after policies and regulations take effect, it is too late,” said one of Daimler’s close contacts.

With this in mind, the tech center works closely with the brand’s external affairs team which keeps its finger on the regulatory pulse – and this has proven to be essential when it comes to so-called vehicle-to-vehicle technology. all, or V2X.

V2X controls communications between a car and “everything” outside, from 5G cellular signals and low-orbiting satellites to smart traffic lights and cameras on the road.

In China, vehicles will soon need full V2X capabilities to achieve a higher safety rating under a new version of its Vehicle Safety Assessment System, or New Car Assessment Program (NCAP). , which is expected in 2025.

“We knew that this regulation was going to be implemented. We started to develop these self-driving technologies, including V2X, to be in compliance with the new law and we did it well before the coming into force. of the new regulations, “said one of the sources at the tech center.

Editing by David Clarke

Our Standards: The Thomson Reuters Trust Principles.


About Author

Leave A Reply