BEIJING, (Reuters) – Mercedes-Benz will use this year’s Beijing auto show to pitch how it plans to navigate China’s fiercely competitive car market, where Chief Executive Ola Kaellenius says the German carmaker is facing intense pressure but will not be dragged into a price war.
Faced with cut-throat competition from cheaper, fast-moving local brands, Mercedes and other legacy carmakers such as rival BMW are seeking to reassert their appeal in the world’s largest car market amid falling sales.
“I wouldn’t count on the intensity of competition suddenly disappearing – and that’s not our plan,” Kaellenius told reporters on the eve of the show.
The Stuttgart-based carmaker hopes to stay in the race with innovation and an increasingly local footprint in terms of suppliers and development.
Mercedes will not be drawn into a price war with Chinese carmakers, Kaellenius said, adding that the company could live without certain sales volumes in lower segments if that makes “less economic sense”.
After breaking foreign carmakers’ long-held dominance in the entry-level segment with low-cost electric vehicles, Chinese players like BYD are now looking to the premium market, ratcheting up further pressure on Mercedes, whose sales in the region tumbled by 27% in the first quarter.
Mercedes plans to overhaul its lineup in China with seven new models by 2027 and the rollout of advanced driving assistance systems co-developed with Chinese tech firm Momenta. At the auto show, it will debut a new electric GLC with two versions exclusive to the Chinese market.
“It would be completely wrong to believe that pedigree does not matter. It does matter,” Kaellenius said when asked whether Mercedes’ heritage carried the same weight in a tech-driven market.
But young Chinese consumers are more willing to shop around on car brands, he said, adding, “It’s a complete roller coaster market.”
Reporting by Nick Carey and Rachel More, Editing by Louise Heavens
