The two firms have signed a letter of intent stating that they are to ‘evaluate additional initiatives at corporate level as well as to support each other with further investments’.

The latest agreement builds on a long-term strategic partnership between the firms. Earlier this year they agreed to invest €2bn in the Joint Venture Beijing Benz Automotive Co, Ltd. (BBAC)  to expand capacity to include the GLK compact SUV as well as three models of the new generation of Mercedes-Benz premium compact cars.

As of 2013, a new engine plant will produce four-cylinder gasoline engines, which will be used in locally produced Mercedes-Benz passenger cars and vans.

A new R&D centre at BBAC will also be established, which will mainly focus on vehicle testing and adaptation as well as R&D activities with suppliers.