BEIJING - The Chinese have a saying that "timely snow promises a good harvest".
German luxury auto icon Mercedes Benz would likely agree as its first locally made SUV GLK rolled off the production line in Beijing as the winter's first snow fell on the capital city.
The model by Beijing Benz - Mercedes' joint venture with Beijing Automotive Group - is the latest entry in the country's heated luxury SUV sector, which registered soaring 66 percent year-on-year growth in the first 10 months of 2011, far beyond the performance of the overall auto market.
"No doubt, local production of the GLK is not only a benchmark in Beijing-Benz's portfolio, but also shows the company's confidence and perseverance to further tap China's high-end auto segment," said Xu Heyi, president of the joint venture.
As an import, the high-end compact SUV sold 12,140 units in 2010 and 11,490 in the first six months of this year alone to become one of the most popular foreign-assembled luxury SUVs in China.
The locally built model is almost exactly the same as the imported version, except with a bit longer wheelbase to suit domestic tastes. It is expected to go on sale around the end of the year at prices ranging from 380,000 yuan to 400,000 yuan.
The company will stop importing the GLK, said company executives. In all, it has been a banner year for the company.
"Our sales are expected to grow over 85 percent in 2011 from last year, and revenues will greatly increase, too," said Xu.
Including imported vehicles, Mercedes-Benz reports year-to-date sales of 157,000 vehicles in China, a 36 percent increase over a year ago, already surpassing its full-year figure for 2010.
"Such fast development is due to adjustments in our product structure and good foresight," Xu added.
Joining the queue
Almost all the high-volume luxury nameplates now offer locally produced models in China.
BMW Group makes its 3 and 5 series in the country along with a localized long-wheelbase 5 series Li. Fifty percent of its cars sold in China are now locally produced models.
Audi's localization rate is even higher - 85 percent of its China sales are cars made in the country.
Beijing Benz currently builds the long-wheelbase E-Class and new-generation C-Class in China, which generate about 30 percent of overall Mercedes sales in the country.
Beijing Benz stepped up the pace this year to compete for a bigger share of the highly profitable segment.
On July 9, construction began on Beijing Benz's new engine plant in Beijing, the brand's first outside Germany. It is scheduled to begin operation in 2013 with a first-phase capacity of 250,000 units.
"By 2015, our production capacity is expected to reach 500,000 units, increasing by about 100,000 units each year," Xu Heyi told reporters in an earlier interview.
He also said that the joint venture will launch four locally built models in five years. In addition to the GLK, a new A-Class, new B-Class and a small SUV BLK will be made in China.
"Exactly one new localized model will hit the market each year from 2012 to 2015," added Cai Suping, senior executive vice-president of Beijing Benz.
By 2015, Beijing Benz will also have 25 to 30 new dealerships around the country, company executives said.