Business & Investment

Mercedes-Benz doubles China Reuters

4/4
© Reuters. File photo: The Mercedes-Benz Vision AVTR concept car is on display during the Media Day of the Shanghai Motor Show held in Shanghai, China on April 19, 2021. REUTERS / Aly Song

2/4

Norihiko Shirasuzu

Beijing / Shanghai (Reuters)-Mercedes-Benz, a German company founded by the inventor of the car, has more resources for cutting-edge research and design capabilities in China as the center of gravity of the new car world shifts east. Is pouring.

Mercedes-Benz has doubled its bases in Beijing and Shanghai to create “homes away from home,” anticipating US and German combined automotive market regulations and consumer trends.

Three years after first announcing plans to strengthen domestic research and development (R & D), a luxury car brand owned by Daimler (OTC :) will announce the new TechCenter China in Beijing this month.

Reuters spoke with four people near the Tech Center and the brand’s Chinese design studio, who are familiar with the company’s new Chinese strategy. Everyone couldn’t be named because they weren’t allowed to talk to the media.

The new technology center, with 1,000 engineers, is more than three times larger than the one opened by Mercedes-Benz in 2014 and is the first outside Germany to test “everything” and is technically “equivalent” to the much larger R & D headquarters. It has become. Near Stuttgart, a person near the center said.

Mercedes-Benz also invested heavily in upgrading its design studio in China, moving the entire team from Beijing to Shanghai, a megalopolis of about 25 million people known as the center of China’s automotive design.

Mercedes-Benz has good reason to strengthen its business in China.

Despite the pandemic, car sales in China increased 12% last year to 774,000, surpassing the following two markets: Germany (286,000) and the United States (275,000).

Approximately 80% of the cars sold in China are also manufactured in China, usually equipped with a large number of features and models only in China, and Asia as a whole will account for almost half of global sales in 2021.

The world’s largest automobile market in China since 2009 is expected to continue to grow steadily, and demand is projected to reach 35 million by 2030 from the current 25 million.

“Second home”

However, Mercedes-Benz, like all other foreign car makers in China, has local EV startups such as Xpeng (NYSE :), Li Auto, Nio (NYSE :) and high-tech features tailored to Chinese consumers. There is increasing pressure from stylish cars equipped with.

That’s why German carmakers’ “second home” strategy for China focuses on making their designs and technologies more agile, responding quickly to ever-changing landscapes, and firmly establishing the Mercedes-Benz brand. increase.

“The expectation in China is that a localized digital services ecosystem will provide an in-car experience. Such solutions must be devised and built by people who live in China and have a true understanding of the mobile internet. “We have to,” said Bill Russo, head of the consultancy department. Automobility Ltd in Shanghai said.

Mercedes-Benz customers in China average 36 years old, about 20 years younger than Germany, and are tech-savvy, but they also have the infamous dishonesty of jumping from brand to brand as trends change.

Mercedes has spent 1.1 billion yuan ($ 170 million) on upgrading the center, ensuring that much of the investment can run a series of tests locally. Rather, it is sending new technology back to its Sindelfingen headquarters in Germany.

“The main reason for the expansion is to get closer to those customers and their needs,” said a person near the technical center. “Here we finally have everything we need to fully test the car,” Source said.

The center features the latest chassis test benches and other batteries, including noise, vibration and harshness, and an e-drive powertrain, with the flexibility to replace them with new ones as technology advances.

Mercedes has also added features that may be important to Chinese customers, such as a team specializing in intelligently connected electric vehicle (EV) technology.

“Technical savvy customers here demand that you be very local in terms of intelligence, connectivity and autonomous driving,” said one source.

THINK ROSE GOLD

All four sources said the sharper focus on Chinese customers in recent years has already been rewarded.

The willingness to create Chinese-only colors has led to a survey of the tastes of young luxury buyers. While sensitive to being considered hip and high-tech savvy, interest in style inspired by the ancient Chinese dynasty has revived.

As part of that research, the studio devised “Rose Gold Metallic”. This is a variation of the rose gold tone tuned for the car that was first used as the exterior color for the Mercedes-Benz A-Class L sedan in 2018. EQA and EQB are now available in rose gold and are also EQC’s interior tones.

“A global idea inspired by China,” said a source close to the studio, saying that Mercedes needs to serve Chinese customers first, but some of the ideas raised in China will be global. Added.

Moving the studio to Shanghai was partly driven by the need to significantly speed up the design process by making the studio more digital, as most virtual modeling vendors are based in Shanghai. rice field.

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

Designers usually sketch a car on paper or a touch-sensitive computer screen and help a professional modeler engrave the design on a clay model. Mercedes-Benz plans to more or less discontinue these physical models.

In the new process, the Shanghai studio will use virtual tools to review the design, except for the occasional 1/4 size physical model, according to one of four sources.

As the studio advances to the finals of the in-house car design competition, it will send designers and modelers to the main German studio to create a life-size model for the final round.

Road rules

Daimler’s willingness to step up technological development in China was also at a time when the cost of failing to keep pace with Beijing’s policy makers was higher than ever.

Beijing’s radical regulatory crackdown in recent months has put pressure on the automotive sector, clearing billions of dollars from the value of some of the country’s most famous private sector.

This is partly because tensions between the United States and China have created a tricky environment for foreign companies to import technologies developed elsewhere.

And from battery technology to new types of mobility such as smart connectivity and autonomous driving, China’s policies and regulations are changing and evolving rapidly.

“It’s too late to respond to changes after policies and regulations have begun,” said one of Daimler’s closest contacts.

With that in mind, Tech Center works closely with the brand’s foreign affairs team, which is constantly aware of regulatory pulsations. This has proven to be important for so-called Vehicle-to-Everything (V2X) technology.

V2X controls the communication between the car and the outside “everything”, from 5G cellular signals to low earth orbit satellites, smart traffic lights and cameras on the road.

In China, vehicles will soon have full-fledged V2X capabilities to achieve the highest safety rankings under a new version of the vehicle safety assessment system, or the New Car Assessment Program (NCAP) scheduled for 2025. Must be installed.

“We knew that this regulation would be enforced. We started developing self-driving technologies, including V2X, to comply with the new law, and did so before the new regulation began,” said a Technology Center source. One said.



Mercedes-Benz doubles China Reuters

https://www.investing.com/news/stock-market-news/home-from-home-mercedesbenz-doubles-down-on-china-2639663 Mercedes-Benz doubles China Reuters

Back to top button