Home to home: Mercedes-Benz doubles down on China

Texas News Today

FILE PHOTO: The Mercedes-Benz Vision AVTR concept car is displayed during the media day of the Shanghai Motor Show on April 19, 2021 in Shanghai, China. Reuters / Ellie Song

10 October 2021

Norihiko Shirasuzu

BEIJING/SHANGHAI (Reuters) – Mercedes-Benz, a German company founded by the car’s inventor, has more resources in China in cutting-edge research and design capabilities as the new car world’s center of gravity moves east. I’m putting ..

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

Daimler’s luxury car brand will announce the new Tech Center China in Beijing this month, three years after it first announced plans to strengthen domestic research and development (R&D).

Reuters spoke to four people near the tech center and the brand’s Chinese design studio who are familiar with the company’s new Chinese strategy. All could not be named as they were not allowed to speak to the media.

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

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

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

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

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

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

“second home”

But Mercedes-Benz, like all other foreign automakers in China, draws from local EV startups such as Xpeng, Li Auto and Neo, as well as stylish cars with high-tech features tailored to Chinese consumers. The pressure is increasing.

This is why German carmakers’ “second home” strategy for China is focused on making their designs and technologies more agile, responding quickly to the ever-changing landscape, and firmly establishing the Mercedes-Benz brand. Growth.

“China hopes that a local digital services ecosystem will provide an in-car experience. Such solutions are designed and built by people living in China and with a true understanding of mobile internet. We need that,” said the head of the consulting department. Bill Russo said. Automobility Limited in Shanghai said.

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

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

“The main reason for the expansion is to get closer to those customers and their needs,” said a person near the tech centre. “Here we finally have everything we need to thoroughly test the car,” said the source.

The centerpiece includes the latest chassis test bench and other batteries for noise, vibration and stiffness, and an E-Drive powertrain, with the flexibility to replace them with new ones as technology advances.

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

“There is a demand from tech-savvy customers to be very local in intelligence, connectivity and autonomous driving,” said a source.

think rose gold

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

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

As part of that research, the studio produced “Rose Gold Metallic”. It is a variation of the tuned Rose Gold tone for the car that was first used as the exterior paint for the Mercedes-Benz A-Class L sedan in 2018. The EQA and EQB are now available in Rose Gold and so are the interior tones of the EQC.

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

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

“Plus, Shanghai is a very easy place to recruit design talent,” said a source near the studio, north of The Bund, the city’s main waterfront district.

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

In the new process, the Shanghai studio will use virtual instruments to review designs, except for physical models sometimes 1/4 the size, according to one of four sources.

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

road rules

Daimler’s desire to pursue technological developments in China also came at a time when the cost of failing to keep pace with Beijing’s policymakers was greater than ever.

Beijing’s radical regulatory action in recent months has put pressure on the automotive sector, pulling billions of dollars out of value from some of the country’s best-known private sector.

This is partly because tensions between the United States and China have created a difficult 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 rapidly changing and evolving.

“It is too late to respond to changes once policies and regulations are introduced,” said one of Daimler’s closest contacts.

With this in mind, Tech Center works closely with the brand’s foreign affairs team, who are always on the lookout for regulatory trends. This has proven to be the key to so-called vehicle-to-everything (V2X) technology.

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

In China, vehicles will soon have full V2X capabilities to achieve the highest safety ranking under a new version of the Vehicle Safety Assessment System, or New Car Assessment Program (NCAP), scheduled for 2025. should be installed.

“We knew this regulation would be enforced. To comply with the new law, we started developing these self-driving technologies, including V2X, before the new regulation began. A source at the center said.

(Edited by David Clarke)

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