Daimler’s Mercedes-Benz division has set up a sales management unit for China in Stuttgart, Germany and announced the expansion of its dealer network in China, as well as a new aftersales initiative.

The company said that all sales functions will be coordinated by the Stuttgart-based unit, Sales Management China, and that it will be working very closely with the company’s vehicle logistics unit.

The aim, according to Daimler, is to address challenges, market requirements and specific needs relating to Chinese business even more effectively and to provide colleagues in China with “ideal support” from headquarters. It said the closer collaboration would provide Chinese market support in key decisions relating to future sales and products in an effort to sustain growth in China.

The new unit will be headed by Bernhard Auer, a sales specialist and experienced expert on China, who will report directly to the vice president of sales at Mercedes-Benz Cars, Matthias Luehrs.

In terms of expansion of Mercedes-Benz’s dealer network in China, the company aims to grow it annually by an average of around 50 new dealerships and will target regions away from the well-known mega-cities, bringing with it a demand for new supply routes for both finished vehicles and aftermarket parts.

This year the target figure on new dealerships will beat the targeted annual average according to Daimler, with 75 new dealerships put into operation, including in 36 cities in which the brand previously had no presence. This will bring the number of Mercedes dealerships in China to more than 300.

“We have taken numerous measures for our Chinese business in the past six months and are proceeding step by step,” said Hubertus Troska, the member of Daimler’s Board of Management responsible for China (pictured). “May saw a continuation of the positive sales trend from the previous months and we are keeping our foot on the gas together with the sales organisation in Germany.

Troska went on to say that along with the expansion and rejuvenation of its product range, a decisive factor in the company’s performance was the consistent development of the dealer network.

“In this way we are continually opening up cities and regions in which Mercedes-Benz has not previously had an adequate presence,” he added.

In terms of service parts in China Daimler is operating a division called Daimler Northeast Asia Parts Trading and Service (DPTS), which is responsible for the provision of logistics services, trading and technical support for spare parts.  A spokesperson said that there were already five operational DPTS warehouses in China: Beijing, Shanghai, Guangzhou, Yangzhou and Chengdu. He said DPTS had a high service-level of above 90% parts constantly in stock and that warehouse space would increase further within the next years.

The aftermarket could become the major area of profitability for carmakers as China’s automotive market matures. With the number of passenger vehicles on the roads in China reaching 100m in 2012, plus 100m more vehicles and two-wheelers sharing those roads, the aftermarket potential is already significant.

Speaking at the Automotive Logistics China conference held in April this year, Jesse Hu, senior project manager at analyst Technomic Asia, suggested there is more potential in the aftermarket because of the price wars, high inventory and overcapacity in the new car market.

Hu pointed out that in a mature automotive market, the aftermarket usually contributes to 60% of profits, but that in China it is currently only contributing 40%. She predicted, however, that the aftermarket would grow faster than the new vehicle market in the coming years. Logistics providers were already enjoying an 18% annual growth rate in the sector, she said.

“We can conclude that the golden period of car sales in China has passed and we should shift our attention from car sales to the aftermarket,” she said.

This reflected government policy. Dr Liu Xilong from China's National Development and Reform Commission (NDRC) said that there would be a shift towards a more service-orientated economic model, which would need the latest management techniques to sustain growth through improved efficiency.