Daimler's constructs new $2.4b plant in Beijing

The first Mercedes-Benz engine plant outside Germany is also under construction at the joint venture. Scheduled to be operational next year, it will produce three types of gasoline engines. The plant's designed annual production is 250,000 engines a year at the outset.

In the first eight months of the year, Mercedes-Benz's China sales increased by 6 percent to about 127,700 vehicles, growth that trails its rivals Audi and BMW. Both registered year-on-year growth above 30 percent in the period.

A Mercedes-Benz SLS AMG Electric Drive model is displayed on media day at the Paris Mondial de l'Automobile September 27, 2012. The Paris auto show opens its doors to the public from September 29 to October 14. [Photo / Agencies]

Audi's sales in China in the first eight months totaled more than 261,000, while BMW's delivered about 192,800 units.

The two are also expanding local production capacity in China, which is already the largest market in the world for both.

Market research firm LMC Automotive forecasts that China's luxury car sales will increase 19 percent this year to more than 1.1 million units and the market will maintain double-digit growth over the next five or six years.

But the slowing economy and increasing competition is piling up pressure. The year more luxury dealers are offering significant discounts to drive sales.

Daimler has lowered the profit forecast of its Mercedes-Benz car unit due to falling profitability in China and deteriorating market conditions in Europe, according to recent foreign media reports.

Contact the writers at zhangzhao@chinadaily.com.cn and hantianyang@chinadaily.com.cn

A Mercedes-Benz Electric Drive model is displayed on media day at the Paris Mondial de l'Automobile September 27, 2012. The Paris auto show opens its doors to the public from September 29 to October 14. [Photo / Agencies]