The BAIC X25, which uses Smart ForFour underpinnings through existing collaborations between the two companies.

Stuttgart - Chinese state-owned car company BAIC has purchased a 5 percent stake in Mercedes parent company Daimler, the German company announced on Tuesday.

This will make BAIC the third-biggest shareholder in Daimler, after Geely and Kuwait’s sovereign wealth fund.

BAIC is also South Africa’s newest vehicle assembler, having commenced SKD (semi-knocked-down) assembly of the X25 compact crossover at its Coega plant last year ahead of full-scale production likely commencing in late 2019.

Daimler has owned a 10 percent stake in BAIC since 2003, and the two are production and R&D partners in the Chinese market.

“We are very pleased that our long-standing partner BAIC is now a long-term investor in Daimler,” said Mercedes boss Ola Källenius.

“This step reinforces our successful partnership and is a signal of trust in the strategy and future potential of our company. 

“The Chinese market is and remains a crucial pillar of our success - not only for sales, but also for our product development and production.”

At this stage there is no word on what further product collaboration would exist between the two car companies.

IOL Motoring