Daimler to Invest $5 Billion in China and the US

Daimler to Invest $5 Billion in China and the US

One of the global leaders in luxury automobile manufacturing, the German giant Daimler AG, is poised to seize a golden opportunity to claim the luxury car crown with a bold investment initiative. By investing over $5 billion within the United States and China, executives at Daimler AG are hoping to increase production in both of these key markets while surpassing their main rivals Audi and BMW AG in the process. The dual investment strategy, which allocates $2.63 billion for Chinese development and $2.4 billion for American expansion, is designed to vault Daimler AG’s signature Mercedes-Benz division to the top of the luxury car market.


By investing such significant sums of capital in the American and Chinese marketplaces, Daimler AG is making a daring twofold wager. First, the company is assuming that the U.S. will remain the world’s strongest base of luxury car consumers and is directing resources accordingly. Second, they are hedging this initial bet with a strong move in the emerging market of China, which is expected to top 1 million luxury cars on the road next year. With this sound financial move, Daimler AG has set itself up to exceed the sales of its main competitors, including the Audi line which outsold Mercedes-Benz last year. Another titan of the luxury car game, BMW AG, has also been served notice that their place atop the industry’s sales charts last year is in serious jeopardy.

Daimler AG is also hoping to expand the market presence of its other lines, including Smart and Maybach, in order to fully capitalize on their latest gamble. The billion dollar investments are structured to increase manufacturing and production of these two brands, as well as the iconic Mercedes-Benz line, throughout China and the United States. The stated goal from Daimler AG is to outpace the sales of their two primary rivals by the year 2020, and considering the scope of their multinational investment strategy, that mission may be accomplished sooner than that. Unless both Audi and BMW AG launch a concerted campaign to secure their brand awareness and preeminence within the luxury car marketplace, Daimler AG will simply outmuscle and outmaneuver the field.

Shareholders of Daimler AG stock have certainly responded in a positive manner to the recent disclosure of these major investment moves, as shares of Daimler stock rose by 3.4% after the report. Whether or not consumers of luxury automobiles react in kind remains to be seen, but Daimler’s decision to divert resources to China and the U.S. was motivated by the fact that these two countries are purchasing luxury vehicles at a higher rate than Europe. While the German-owned company produces most of the parts and components for its vehicles in Europe, the fact that most of their actual sales come from Chinese and American drivers compelled the company to capitalize on the trend. For an ailing American manufacturing sector, the additional jobs which will be created at Daimler’s plant, located in Tuscaloosa, Alabama, are far more valuable than brand new Benz.

Sarah Danielson is a contributing writer for eRentals, the best online car rental supplier with over 12,000 locations worldwide.

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