Daimler reports record revenue growth in 2014

Mercedes-Benz unit sales in country increased by 26%, more than premium rivals

German carmaker Daimler AG earned record revenue of 129.9 billion euros ($146.92 billion) in 2014, up 10 percent year-on-year, with China having contributed to around 10 percent of that amount.

China is the second-largest market for Daimler in terms of unit sales in 2014, after the US and followed by Germany, the company said Friday.

Daimler global sales also reported record sales of 2.5 million units last year, up 8 percent from 2013, the company announced Thursday at a press conference in Stuttgart, where Daimler's headquarters is located.

China is the key for Mercedes-Benz if it aims to achieve its goal of becoming the largest premium auto brand by 2020, experts said.

In 2014, global sales of Mercedes-Benz (including Smart) were more than 1.72 million units, compared with Audi's 1.74 million. BMW reported its highest unit sales of 1.81 million in 2014, and BMW's Mini brand saw sales reach 300,000 units last year.

"It [China] is the market that will determine who comes out on top in the premium segment," Daimler Chief Executive Dieter Zetsche said at the press conference on Thursday, noting that Mercedes-Benz aims to sell over 300,000 units in China this year.

The company has been catching up in China. A total of 288,006 units of Mercedes-Benz cars (including Smart) were sold in China in 2014, up 26 percent year-on-year, faster than Audi and BMW. In 2014, its market share rose by a slight 0.2 percent in China, the company said.

"Mercedes-Benz's China sales last year is in line with our expectations, which means that its efforts in improving product portfolio and distribution began to pay off," Zhu Bin, a senior analyst at consultancy LMC Automotive in Shanghai, told the Global Times on Sunday.

The new Mercedes-Benz C-Class was launched in China in August 2014, which is designed to attract young elites in China. The company said Thursday that the C-Class plays a major role in its total unit sales.

Mercedes-Benz has also stepped up efforts in rolling out compact cars in China, to make its products more affordable to the young demographic. The GLA compact SUV is expected to be produced at the company's joint venture plant with local partner BAIC Motor in Beijing in the next few weeks.

"The new GLA may help to reduce the company's gap with its rivals in China," Jia Xinguang, an expert at the China Automobile Dealers Association, told the Global Times on Sunday.

But Jia noted that the local production capacity of Mercedes-Benz might stand in the way for its future growth in China. The current capacity at the Mercedes-Benz Beijing plant stands at around 200,000 units each year, the smallest among the three German premium brands.

The capacity of BMW's plant in Northeast China's Liaoning Province with Brilliance Auto is around 300,000 units currently, and the number is expected to expand to 400,000 in the next two years, media reported in January.

Audi shares production with Volkswagen in China, whose capacity is expected to top 5 million by 2020 with new plants in construction.

"Mercedes-Benz is expected to report a higher growth rate than its main rivals but it will still take years before it could finally become on par with its rivals," Zhu noted.

The three German brands account for approximately 70 percent of China's premium market, according to experts.

China's premium car segment rose 25 percent in 2014, according to data from LMC Automotive, but the sector may decline to around 17 percent this year amid the overall lackluster economy in China.

But Jia noted that China's premium car segment still has great potential as the auto market further matures.

"People tend to buy higher-end vehicles or premium brands when they decide to replace their first car," Jia noted.

Around 60 percent of car sales in Beijing are second-time purchases, but the national average is only around 30 percent at present, which could mean opportunities for premium brands and the market shares of homegrown brands may decline further, according to Jia.