Key facts
- Mercedes-Benz CEO Ola Kaellenius pledged to protect the company's U.S. business from potential sales bans.
- Legislation to toughen a ban on Chinese automakers entering the U.S. market was approved by the Senate Commerce Committee.
- Chinese investors BAIC Group and Geely hold nearly 20% of Mercedes-Benz's shares.
- Mercedes-Benz is increasing U.S. investments, including $4 billion through 2030 for SUV production.
- U.S. sales for Mercedes-Benz grew 15% in the first half of the year.
- BAIC Motor expects a net loss of up to 1.65 billion yuan for the first six months of the year.
Mercedes-Benz CEO Ola Kaellenius has pledged to defend the company's U.S. business from potential sales bans, as legislative efforts in Washington threaten its access to a key growth market due to its significant Chinese investors. The U.S. Senate Commerce Committee recently approved legislation that could exclude foreign automakers with substantial Chinese ties from the American market.
Kaellenius stated that Mercedes-Benz would make necessary adjustments to protect its U.S. presence, acknowledging the geopolitical landscape and U.S.-China competition. The company is actively monitoring the U.S. debate and engaged in discussions with relevant parties. Chinese entities BAIC Group and Geely, through its founder Li Shufu, collectively hold nearly 20% of Mercedes-Benz's shares.
Amidst declining sales in China, where German automakers are struggling against the rapid shift to electric vehicles, Mercedes-Benz is bolstering its production in the U.S., where demand for its traditional vehicles remains strong. The company has committed over $7 billion to its U.S. operations, including a $4 billion investment through 2030 aimed at increasing SUV production at its Alabama plant. Kaellenius also indicated the possibility of establishing engine production in the U.S., contingent on the renegotiation of a North American trade pact that might include local content requirements.
Mercedes-Benz has strong incentives to maintain and expand its U.S. footprint, as sales there grew 15% in the first half of the year, helping to offset challenges in China. The profitable combustion engine cars popular in the U.S. offer higher margins compared to the more expensive electric vehicles. Analyst Matthias Schmidt described U.S. manufacturing as "a license to print money."
BAIC Motor, a joint venture partner with Mercedes-Benz, anticipates a net loss of up to 1.65 billion yuan ($244 million) for the first six months of the year. This is attributed to price war pressures impacting even the premium segment of the automotive market. The company's first-half sales in China fell 28%, and it booked accounting charges related to its China investments.