Beijing Benz Automotive Co. says it will expand its engine plant in Beijing to supply its fast-rising local vehicle production.

 

Beijing Benz, a joint venture between Daimler AG and BAIC Motor Co., will spend 4 billion yuan ($607 million) to expand the plant.

 

The company offered no additional details.

 

The plant produces four- and six-cylinder gasoline engines for Mercedes cars and commercial vans built in China. Last year, the plant churned out 250,000 engines. 

 

Beijing Benz produces Mercedes cars and crossovers, while Daimler's joint venture with Fujian Motor Industry Group Co. assembles vans.

 

The plant has played a role in Daimler's rapid expansion in China since it launched production in 2013. At the time, Mercedes also shook up its local management and consolidated distribution channels for imports and locally produced vehicles.

 

Since then, Mercedes -- China's third-largest luxury brand -- has closed the sales gap with No. 2 BMW.

 

In the first five months of this year, Mercedes' China sales surged 36 percent year on year to 180,537 vehicles on strong demand for two locally built crossovers, the GLA and GLC.