DAIMLER AG’s chief executive officer and BAIC Group’s chairman plan to meet in Beijing this week, possibly to discuss an expansion of their Chinese joint venture and deeper ties between the carmakers, according to people familiar with the matter.

One scenario is for the maker of Mercedes-Benz cars to increase its stake in their existing venture to a majority holding, said the people.

A deal would boost Mercedes-Benz’s presence in its largest market, a move that would be similar to one made a year ago by luxury competitor BMW AG with its local partner Brilliance China Automotive Holdings Ltd.

Successful cooperation with Daimler is also critical for BAIC, whose domestic brand and separate venture with Hyundai Motor Co. have been hard hit by the Chinese market’s decline.

Representatives for the companies declined to comment on the meeting between Daimler’s Ola Kallenius and BAIC’s Xu Heyi. An agreement may not be reached at the meeting due to the complex nature of any possible deal, the people said.

BAIC, a State-owned company controlled by the municipal government of Beijing, has separately been said to be preparing to lift its stake in Daimler to as high as 9.9 percent from 5 percent to be on par with Chinese rival Zhejiang Geely Holding Group Co.

Geely, owned by billionaire Li Shufu, bought its stake in 2018, becoming the German luxury-car maker’s biggest shareholder.

A move by BAIC to raise its holding in Daimler could open the door for the German company to boost its 49 percent stake in their main Chinese joint venture. Bloomberg News reported in December 2018 on the possibility of Daimler holding at least 65 percent.

(SD-Agencies)