In an event held in Beijing on the evening of August 24, Daimler’s Sino-German production joint venture Beijing Benz Automotive Co., Ltd. (BBAC) successfully commemorated its tenth anniversary. The joint venture between Daimler and its Chinese partner BAIC Motor was established on August 8, 2005, and started to locally produce its first E-Class vehicles (model series 211) just about four months later. Today the Beijing-based site is the only Mercedes-Benz plant worldwide that manufactures front- and rear-wheel-drive vehicles and engines under one roof. The anniversary event also saw the lighting of a 6 meter rotating Mercedes-Benz star that will shine brightly in future above the BBAC site.
“2015 marks a decade of a successful partnership between Daimler and BAIC. Our joint venture BBAC undertook tremendous development over the past ten years to now become a key production hub for our company on a global level,” said Hubertus Troska, Member of the Board of Management of Daimler AG responsible for Greater China. “BBAC represents the firm confidence of Mercedes-Benz in the Chinese market, because continuous investment in localization has and will always be essential for our business growth in this country.”
“The strength of BBAC ten years after its establishment is evidence of the successful Sino-German business partnership between BAIC and Daimler,” noted Xu Heyi, Chairman of BAIC Group and its subsidiary BAIC Motor. “Through continuously deepening the close cooperation between our two companies over the past years, we have been constantly moving forward to further enhance our joint company’s competitiveness and to set new benchmarks in China’s automotive industry.”
BBAC’s growth over the past decade
BBAC has developed rapidly since its inception ten years ago. In 2014, almost 150,000 vehicles, nearly eight times as many as in 2006, rolled off BBAC’s production lines, accounting for more than one-half of Mercedes-Benz’s total 2014 sales volume in China. This figure was already above 60% as of June 2015, and is expected to grow further in the future. June 2015 saw also the first time ever that more than 20,000 units rolled off the assembly lines in a single month, a figure that roughly equals the company’s annual production from 2007. This constant growth of BBAC is backed by strong funding: The two shareholders are jointly investing €4 billion in the company to strategically prepare the company for the future.
About €400 million of this investment has been spent solely on the first ever Mercedes-Benz passenger car engine plant outside of Germany. Inaugurated in late 2013, the facility produces 4- and 6-cylinder engines, mainly to meet local demand. The export of key machined engine components to Mercedes-Benz engine plants in Germany is a side effect, but one that underlines the high quality of the Beijing-made products. The production line has been designed to be flexible, with an annual capacity of 250,000 units for the first phase. Higher numbers are planned in line with the ongoing growth in passenger car sales.
“Driven by the full commitment of our shareholders and a dedicated, qualified Sino-German team, we have paved the way for BBAC’s success over the past ten years,” states Peter Schabert, President and CEO of BBAC. “We have pushed forward the expansion of the company step-by-step and systematically, to cover today a comprehensive portfolio of various car and engine models that is flanked by a strong local R&D and quality management expertise as well.”
In the summer of 2014, BBAC once more underlined its ambition to build in and for China with the inauguration of an all-new R&D Center. The focus of the experts is the locally built product portfolio. The site features various test laboratories and benches, such as for engines, emissions, and climate and corrosion. It also includes a proving ground, as well as an endurance and analysis workshop. In addition, specialists can prepare on-site offline tryouts in Mercedes-Benz’s first prototype workshop outside Germany.
April 2015 marked another important milestone in the localization strategy of Mercedes-Benz, with the official kick-off of production for the German car maker’s first locally built compact car model, the GLA. Together with the long wheelbase E-Class, the standard and long wheelbase C-Class, and the GLK, it completes the current lineup of locally built vehicles. The GLA is produced in a top notch, €720 million compact car plant that is housed within BBAC’s compound, and was built up from scratch in a record time of less than 3 years. Since its inauguration BBAC has also become, in terms of land size, the biggest Mercedes-Benz passenger car plant worldwide. BBAC currently covers a total area of about 3.7 million square meters, twice as much as a decade ago.
Globally acknowledged Mercedes-Benz quality standards
Despite the rapid growth, there has been no lessening of Mercedes-Benz’s stringent global quality standards in Beijing. At the core is the quality feedback loop system. It consists of four circles alongside production and targets identifying and solving potential issues during production stages. Each loop focuses on the control of a particular stage of the added-value of the product in the manufacturing process. At BBAC, though, quality management starts even earlier, for instance with strict management of local suppliers, currently more than 300 in number, or simply with strong teamwork between quality, engineering and production experts, which begins at very early development stages. So the company can ensure – backed by state-of-the-art technologies – that its locally produced vehicles and engines are always of excellent quality.
Employee training is another key focus for BBAC to keep its quality promise – in particular as the number of staff has more than quadrupled in the past ten years to over 11,000 employees currently. A key asset for the company has been both training in China and abroad, including intensive and continuous on-the-job training and knowledge transfer from the international training programs. For example, to prepare for the ramp-up of the all-new long wheelbase C-Class, around 3,000 staff were qualified. 200 of these were sent abroad for training at the Mercedes-Benz plants in Bremen and in Sindelfingen in 2012. Back in Beijing, these multipliers directly passed on their knowledge to hundreds of colleagues.