Daimler AG and Beijing Automotive Group (BAIC) will deepen their strategic partnership: according to a recently signed binding agreement Daimler AG will invest in BAIC Motor, the passenger car unit of China’s BAIC Group. This joint strategic move comes ahead of an intention by BAIC Motor to launch an initial public offering (IPO) in the future. Daimler’s investment will take place through the issuance of new shares corresponding to a 12 percent stake in BAIC Motor.

The agreement states 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 percent to 51 percent and will be able to consolidate this joint venture within BAIC ahead of its IPO, according to a Daimler press release. At the same time, Daimler will increase its stake in the integrated sales joint venture Beijing Mercedes-Benz Sales Service Co. by 1 percent to 51 percent.

The BAIC Group sold over 1.5 million vehicles in 2011. Both Daimler and BAIC have already established a long-term strategic partnership, including significant investments in the Chinese automotive industry over the past years, according to the companies. 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. This significant milestone means that all sales activities for imported and locally produced Mercedes-Benz cars will now be combined under one roof.