China's Beijing Automotive Group Co. Ltd. (BAIC) has escalated its relationship with Germany's Daimler AG with the purchase a 5 percent stake in the automotive company.
The purchase of the 5 percent share puts the company in the top ranks of Daimler's top shareholder, which includes BAIC's Chinese rival Geely.
BAIC, a state-owned automotive company, has a standing partnership with Daimler in China.
Through its listed subsidiary BAIC Motor, BAIC is actively producing Daimler's luxury branded Mercedes-Benz vehicles in the country. To solidify its partnership with BAIC, Daimler had purchased a 10 percent stake in BAIC's subsidiary that produced its vehicles in China.
Daimler's largest shareholder for the past year remains to be BAIC's rival Geely, which currently holds a 9.69 percent of Daimler's shares.
The Chinese carmaker unexpectedly bought the stake in Daimler last year, surprising even the executives of the German automotive manufacturer. Geely is immediately followed by Kuwait's Sovereign Wealth Fund as Daimler's top shareholder.
The Kuwaiti sovereign wealth fund currently holds a 7 percent stake in Daimler.
Geely currently owns Volvo Cars, another popular European car brand. Geely's acquisition of the luxury Swedish car brand proved to be a success as the Chinese firm had managed to turn around its finances with record sales shortly after it took over.
Earlier in the year, Daimler had hinted the possibility that BAIC could purchase a stake in its company as part of its effort to enhance the cooperation and partnership between both companies. On Tuesday, Daimler officially announced BAIC's purchase of a 5 percent stake in the company.
Daimler's CEO Ola Kallenius mentioned in a prepared statement that the company was very pleased with the purchase as it now essentially makes BAIC a long-term investor.
The purchase of the stake has been seen by the company as a step forward in reinforcing the successful partnership between both companies and a gesture of trust in the future potential of the said partnership.
Both companies, which now hold substantial stakes in the German automaker, are now helping it penetrate the Chinese market.
The Chinese firms are also assisting Daimler in its push for electrification. Geely and BAIC both are continuing their respective projects with Daimler, albeit on separate endeavors.
The German automaker announced last year that it has partnered with BAIC to put up a $1.68 billion assembly plant in China to produce the company's next-generation Mercedes-Benz electric vehicles.
Meanwhile, Geely announced in March that it had signed an agreement with Daimler to manufacture the company's next-generation subcompact electric Smart-branded cars.
