Daimler Raises Stake in China Sales Company

Daimler AG has reached agreement with LSH (Lei Shing Hong) over the change of ownership structure of Mercedes-Benz China Sales, paving the way for integrating its dealership networks in China. The automaker successfully increased its stake in the sales joint venture from 51% to 75%, while LSH’s share was reduced to 25% from 49%.

Mercedes-Benz has two separate sales ventures in China, co-owned respectively with LSH and Beijing-Benz and, accordingly, two dealership networks, one for imported and the other for locally-made models. The split has made it difficult for Daimler China to have a coordinated marketing strategy, thus, according to many analysts as well as Daimler Chairman Dr. Zetsche, impeding its growth. In the first half of 2012, Mercedes-Benz sold 105,200 cars in China, lagging significantly behind BMW (159,000) and Audi (194,000).

To integrate the two ventures, Beijing-Benz has advised LSH to withdraw from the three-party game. Another arrangement proposed is to establish a new sales company which would involve all three sides with LSH playing a minor role. Both were resisted by LSH.

In mid-April this year, there were 214 "4S" Mercedes-Benz dealerships in China, about 50 of them being controlled by LSH. Mercedes-Benz plans to increase dealership count to over 300 by 2015.