DAIMLER AG has opened a research and development (R&D) center in Beijing tasked with further tuning its Mercedes-Benz brand to wealthy Chinese tastes and closing the sales gap with Audi AG and BMW AG.

    The German automaker’s move demonstrates a desire to “embed us more deeply in China, to make cars best suited to China,” Hubertus Troska, Daimler’s China head, told Reuters.

    Daimler is expanding its Mercedes-Benz brand in China at a time when an investigation into anti-competitive practices in the auto industry is prompting carmakers to lower prices. Mercedes-Benz itself has previously said it was cooperating with an investigation into unspecified matters.

    The new R&D center nevertheless signals commitment to a market Troska said would become Mercedes-Benz’s largest in as early as one or two years. With that in mind, the automaker plans to raise the number of Mercedes-Benz engineers and other specialists in Beijing to 500 by the end of next year from 350.

    “It is a logical step to better understand the market and make sure Chinese requirements are properly regarded early in the process when we develop a next generation of cars,” Troska said in an interview last week.

    The R&D center caps a series of moves Troska has made since becoming China head in 2012, including reforming marketing and sales and raising dealer numbers. Its focus on Chinese tastes should help Mercedes-Benz catch up in the local luxury car segment with Volkswagen AG’s Audi and BMW, he said.

    Researcher LMC Automotive projects Mercedes-Benz to sell 291,000 vehicles in China this year, compared with 581,000 for luxury market-leader Audi and 448,000 for second-placed BMW.

    Troska said new models such as the GLA compact SUV should help Mercedes-Benz sell “significantly more than 300,000 units next year.” LMC Automotive puts Mercedes-Benz’s 2015 sales at 386,000 vehicles.

    Daimler has invested about 110 million euros (US$138.30 million) over recent months in the new R&D center and in another center it recently opened in Beijing with local partner BAIC Motor Corp.

    Such investments are more than appropriate, Troska said, given the “growth potential in China is unique.”

    Automobile sales growth in China has slowed in recent months in tandem with a slowdown in the overall economy. But automakers estimate overall annual demand will be as many as 35 million vehicles by 2020, from 22 million vehicles last year.

    (SD-Agencies)