Mercedes Car Group Chairman Dieter Zetsche told China Daily: "I do believe that Mercedes Benz continues to have the top reputation in China. We have started local production and we are developing our dealer network very fast. On that basis, I'm confident that in the near future, we will pass BMW in sales (in China)."

It's a "realistic expectation" for Mercedes Benz to overtake BMW in China sales in two years, said Zetsche, also chief executive officer of DaimlerChrysler.

But, given Audi's long-established production in China and its special status as a government car, Zetsche said that surpassing Audi would not happen very soon.

Mercedes Benz's China sales lag behind Audi and BMW mainly due to its later local production.

In the first 10 months of this year, Mercedes Benz's combined sales on the Chinese mainland and in Hong Kong grew 36 per cent year-on-year to 18,000 cars.

The company started to produce its E-Class sedans at the beginning of this year at DaimlerChrysler's joint venture with Beijing Automotive Industry Corp.

Last week, Mercedes Benz introduced its new-generation E-Class sedan to the venture. Zetsche said Mercedes Benz would also begin production of its new-generation C-Class sedan in China next year.

Audi, China's biggest premium automaker, sold 66,000 cars on the mainland in the first 10 months of this year, up 60 per cent year-on-year. It launched local production in China more than two decades ago.

BMW's January-October sales on the mainland surged 53 per cent year-n-year to 29,300 units. It started to assemble its 3 and 5 Series sedans in China in 2003. Analysts expect the premium car market, especially entry-level premium models, to have great growth potential in China.

Yale Zhang, director of emerging-markets vehicle forecasts at auto consultancy CSM Asia in Shanghai, said sales of entry-level premium cars, such as the Mercedes Benz C-Class, the Audi A4 and the BMW 3 Series, will enjoy a big jump in the next five years as the number of young wealthy people continues to grow in China.

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