Beijing Benz Automotive, the Chinese passenger car joint venture between Daimler and Beijing Automotive Group (BAIC), has laid the cornerstone for a new section of the Beijing plant which will build Mercedes-Benz's new generation of compact cars from 2014.

Ulrich Walker, chairman and CEO of Daimler Northeast Asia said: "We expect local production of our new generation of compact cars to provide additional momentum to our development in this booming segment of the Chinese market."

Daimler manufacturing and purchasing chief Wolfgang Bernhard added: "Our new compacts are so popular with customers that we will add BBAC as the third pillar of our compact car production network [in addition to] the Rastatt and Kecskemét plants in the context of our Mercedes-Benz 2020 growth strategy."

In June 2011, Daimler and BAIC had signed a strategic framework agreement which included future local production of a new generation of compact cars for China plus expanded capacity at BBAC.

Construction of a new engine plant for production of four cylinder petrol engines, which was also part of the agreement, has progressed far with production slated to start next year, Daimler said. Also well on track is establishment of a new R&D centre, which will focus on vehicle testing and adaptation as well as R&D activities with suppliers. Investment for these projects is about EUR2bn and is part of the overall investment programme, according to which Daimler and its partners are spending about EUR3bn in China.

[Editor's note: Beijing Benz was originally the Beijing Jeep Corporation, China's first Sino-western automotive joint venture established in 1984 with American Motors Corporation. Chrysler's subsequent purchase of American Motors and the Jeep brand saw Chrysler and Mitsubishi models subsequently added to the Chinese-made model line.

Beijing Jeep in 2004 became Beijing Benz-DaimlerChrysler Automotive. Chrysler left the joint venture in early 2009 but was retained in the JV's legal name for several more years.

The company started producing the Mercedes-Benz E-Class locally in 2006 and the C-Class in 2008. GLK SUV output began at the end of 2011.]

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