As the founder of this site, I was born and raised in China, and I remain deeply rooted in my homeland. Perhaps some may find it surprising that a person of Eastern origin would be so passionate about German cars, even to the point of obsession. But overall, I am a person driven by a deep love for history, as well as a profound appreciation for the place where I grew up. I am acutely aware of the significant and lasting impact that the W140 had on the history of Chinese automobiles, and this mutual influence is something that I hold dear.
China mainland, country code 819, as how Mercedes-Benz defined in the sales system (excludes Taiwan, Hong Kong and Macau) is the fourth largest buyer of W140. In other words, for Mercedes-Benz from 1991-1998, China was the fourth largest market for the S-Klasse. A total of 13,303 of W140s were delivered as Chinese orders, accounting for 3.4% of total production. Although this proportion is much lower than the 9.2% of Japan in third place, and not much more than the 3.1% of the UK in fifth place, it is still a remarkable start for the S-Klasse and even Mercedes. Today, China is the largest market for the S-Klasse, and W140 has witnessed its rise.
Breaking the Curtain
Benz and Mercedes-Benz, as a means of transportation rather than just a brand, have long appeared on Chinese roads. In 1913, German businessman Franz Oster brought a Mercedes 10/25 PS station wagon to China in Qingdao and established the first Mercedes car sales outlet in China. Not only dealers introduced and sold cars, but also the cooperation of the authorities. As early as 1936-1939, China introduced Mercedes L2000 trucks for public transportation and armed troops and later put them into the war against Japanese invasion. However, cooperation with the former authorities did not deepen the trust between the new China born in 1949 and Mercedes-Benz after WWII. For a long time in history, due to ideological hostility, buying a Mercedes in China was not a simple economic activity, which was difficult for both China and Daimler AG.
From the mid-1950s, due to Mercedes’ worldwide reputation, the Chinese authorities began to purchase luxury cars for political events, especially to entertain foreign guests who favored them. Despite the lack of after-sales and the difficulty of purchasing, the predecessors of the S-Klasse were quite praised in use, and some cars were sent to research institutes for research to help the Chinese automobile industry. At that time, Daimler, like other Western organizations, was cautious and had no representatives or agents in China. To achieve trade, the Chinese authorities had to send people to West Germany to purchase cars and bypass financial and transportation sanctions. This resulted in cooperation that could only be carried out in a small and unstable range until the situation changed in the late 1970s.In 1979, the Chinese Premier visited Daimler in Stuttgart and was presented with the newly launched Geländewagen. Since then, the Chinese authorities have begun to discuss a series of cooperation with Daimler, which must include the introduction of a certain number of S-Klasse.
In 1980, just one year after the Chinese government permitted ownership of private automobiles, the company set up a Daimler-Benz liaison office in Beijing in anticipation of the potential of the Chinese market for luxury sedans. With the increasing number of Mercedes passenger cars in China, in 1982, Mercedes and the Beijing Public Security Bureau jointly established Mercedes’ first customer service center in China to serve 4,500 cars in China. In 1984, the Chinese authorities negotiated with Mercedes to introduce technology to transform the state-owned Hongqi. With a view to intensifying activities in China, 1986 saw the setting up of a subsidiary company, Mercedes-Benz China Ltd., based in Hong Kong. In 1988, 828 of 200 and 230 E sedans were assembled at FAW (First Automobile Works) where Hongqi was produced. At the same time, NG trucks were produced in cooperation with NORINCO (China North Industries Group).
Mercedes-Benz’s business activities in China
- 1936 Established the first assembly line with China Automobile Co., Ltd. in Shanghai, producing 5,000 chassis for automobiles. Then produced 1,800 L2000 trucks.
- 1949 Established contact with the newly established People’s Republic of China for the first time
- 1950 Signed the first contract with the People’s Republic of China, selling more than 40 bus chassis
- 1972 After the People’s Republic of China and Germany formally established diplomatic relations, took the opportunity of the first visit of the German Industrial Association to China Reestablished direct contact with Chinese leaders.
- 1973 During the visit to China by the German Industrial and Economic Organization, the talks with China were continued. Mercedes-Benz officially started its normal after-sales service and training activities in China.
- 1975 Participated in the first German industrial exhibition “Technogerma” held in Beijing
- 1978 Negotiated with the “First Ministry of Machinery Industry” under the leadership of Minister Yang Keng on the establishment of a commercial vehicle assembly plant in China
- 1979 Signed a contract with China National Machinery Import & Export Corporation to sell 1,000 heavy-duty three-axle commercial vehicles to China Former Premier Hua Guofeng visits the Mercedes-Benz car production plant in Sindelfingen
- 1980 Mercedes-Benz Beijing Liaison Office was officially established. An agreement on after-sales service and spare parts supply was signed with China National Machinery Import & Export Corporation. A service station with a Mercedes-Benz auto parts consignment store was established in Beijing.
- 1985 Signed a car production contract with China National Automotive Industry Corporation to assemble 1,000 W/V123 cars from imported parts. Mercedes-Benz will assemble the cars through China First Automobile Works in Changchun by way of license transfer with technical assistance.
- 1986 Mercedes-Benz China Ltd. was established in Hong Kong, which is a subsidiary of Mercedes-Benz Co., Ltd.
- 1987 W123 sedan assembly line was put into production (828 units were assembled between 1987 and 1989). Southern Star Motorcycle Company (SSMC) was established, responsible for the sales and after-sales service of Mercedes-Benz vehicles in the southern part of the People’s Republic of China. China National Machinery Import & Export Corporation/Mercedes-Benz Beijing Service Center was transferred and reopened.
- 1988 Heavy Commercial Vehicle License Transfer Agreement was signed with North Industries Corporation (Baotou). China National Machinery Import & Export Corporation/White Swan Mercedes-Benz Service Center opened.
Affected by the political events that followed, all cooperation including the already negotiated W124 assembly and the technical upgrade Chinese state limousine Hongqi with the M117 engine were put on hold. This led to Volkswagen, which had more confidence in China, using the Audi V8 L to briefly defeat the S-Class as a state limousine. Daimler stopped delivering goods to China in mid-1989, a period that lasted until end of 1991. But after a series of discussions by the authorities, normal exchanges with the West were resumed, and the W140 appeared at this time.
Sales Evolution
In 1991, affected by the aftermath of political events, Mercedes did not launch the new S-Klasse in China like other markets. As a counter-sanction, the Chinese authorities banned government officials from using imported cars. During this period, the main Chinese users of the S-Klasse continued to be the authorities. However, some cars were ordered by Mercedes-Benz China and ready to be sold in 1992. Only 98 S-Klasse were ordered in 1991, mostly 6-cylinder models, which began to be shipped from Germany in January 1992 and took longer to pass through Chinese customs.
In August 1992, Mercedes-Benz China held a press conference for the new S-Klasse sedan at the Diaoyutai State Guesthouse, although many 140 had already been delivered to Chinese customers by this time. Although Mercedes-Benz China could already provide cars, there were still multiple obstacles to purchasing cars for customers other than authorities and diplomatic agencies. The first was the foreign exchange problem. Due to changes in China’s foreign exchange policy and continued fluctuations in exchange rates during that period, Mercedes-Benz China only accepted payments in US dollars or German marks to their Hong Kong agencies. Foreign exchange controls made it difficult to get the purchase money. Then there was the issue of car purchase qualifications. Many Chinese cities still restricted the registration of imported cars. Mercedes-Benz China did not interfere in the import business. Customers had to find an agent to purchase cars from Mercedes-Benz to complete customs clearance. Finally, Mercedes-Benz had no showrooms in China and did not participate in any exhibitions, so customers had little opportunity to learn about the latest products.
Despite all the difficulties, the sales figure for 1992 was 1,719. This figure was already quite successful, as the number of civilian orders for S-Klasse sedans in China exceeded official purchases for the first time. An important reason for the sales was the tariff. Since 1986, in order to protect China’s foreign exchange reserves and joint venture automobile industry, the import tax on cars above 3.0 liters was 220%, which made the already expensive S-Klasse lose many potential customers. Mercedes-Benz realized the changes in the Chinese market and set out to build a sales network in China. In 1987, The Southern Star Motors Company, Hong Kong, in which Mercedes-Benz China (with a 51 % holding), and the leading Chinese trading company, Jardine, Matheson & Co. Ltd. are shareholders, opened up the southern Chinese provinces, set up at the beginning of 1987. The company was only equivalent to a branch of Zung Fu, the agent of Mercedes-Benz in Hong Kong, in Guangdong Province. It was located in a room of the White Swan Hotel in Guangzhou and was responsible for directing the distribution of after-sales business to cooperative maintenance agencies. As of 1993, Mercedes-Benz China only had offices and cooperative maintenance units in mainland China, and no formal sales and after-sales system.
To this end, Karl-Heinz Michel, the newly appointed president of Mercedes-Benz China, created a “three-star” regional dealer network. That is, the three companies “North Star”, “East Star” and “South Star” were authorized to establish a Mercedes-Benz sales and service network according to geographical regions. The joint venture partners of the “three stars” came from Mercedes’ previous partners in Southeast Asia. “North Star” and “East Star”, based in Beijing and Shanghai, were jointly invested by Malaysia’s Lei Shing Hong. Lei Shing Hong has been selling Mercedes-Benz in Taiwan since 1969 and then entered South Korea in 1985. “South Star”, based in Guangdong Province, was jointly invested by Hong Kong’s Zun Fu Hong. Zun Fu Hong has been selling Mercedes-Benz in Hong Kong since 1954 and is the exclusive agent. The three newly established companies began to deploy in June 1993 and carried out sales and after-sales business in their respective territories in China. Shanghai’s East Star established the first Mercedes-Benz showroom in China.
Mercedes achieved real success in China in 1993, as the authorities relaxed controls on imported cars and foreign exchange transactions, with 4,111 of W140s ordered for China that year, surpassing the 3,632 ordered for Japan. The first reason for the significant increase in sales was the exemption of import taxes for foreign companies that purchased imported cars by the Chinese authorities, which led to a significant reduction in the cost of imported cars, as many fictional foreign companies emerged to resell cars. Also, as the large number of imported cars damaged China’s foreign exchange reserves, news of the cancellation of tax-free cars in the second half of 1993 led to further buying. Due to the widespread presence of car dealers located in Hong Kong, cars ordered through Mercedes-China only accounted for a portion of the W140 imported in 1993.
In the 1993 Daimler AG annual report and Mercedes-Benz’s presentation at Genf 1994, the performance of the Chinese and Russian market was specifically mentioned. The incident originated from Mercedes’ East Europe sales representatives signed a preferential order with a Dutch dealer for the Russian market in 1993, but these cars were actually all received by dealers in Hong Kong and sold to mainland China.
In 1994, Mercedes-Benz China began to be active in auto shows in China, participating AUTO CHINA ’94 in Beijing with the S 280 and S 600. At this time, Mercedes-Benz was discussing with the Chinese authorities the possibility of cooperating on the FCC (Family Car China) project, a compact car based on the A-Class under development and incorporating some design elements of the W140 popular with Chinese consumers. At the same time, the Chinese authorities adjusted the tax rate on imported cars according to displacement: it dropped to 110% for cars under 3000 cc and dropped to 150% for cars above 3000 cc. Mercedes-Benz China then adjusted its sales strategy and vigorously promoted the S 280 with a lower tax rate and began to place advertisements in magazines and newspapers. However, since the S 280 was only available in a short wheelbase, its sales were not successful. With the cancellation of the preferential policy for foreign companies to purchase cars by the Chinese authorities in 1994, the sales of imported cars fell significantly, and Mercedes-Benz China only executed 1,433 orders for the S-Klasse.
Starting in 1995, Mercedes-Benz China wanted to promote more new C-Klasse and E-Klasse in China. Because the sales of these two cars in China are quite weak, the annual sales of C-Klasse are only about 30, and the annual sales of E-Klasse are about 300. Therefore, the S-Klasse no longer participates in auto shows and advertising investment is cancelled. Due to the complete cancellation of duty-free cars and Mercedes-Benz’s control over Eastern European dealers, Hong Kong dealers almost no longer resell S-Class from all over the world to mainland China. Due to the recession of the Chinese economy, Mercedes sales in China hit a record low that year, with only 833 W140s. However, Mercedes-Benz China’s construction of the dealer network continues, and several new service centers have been established across the country. Chinese-spec Mercedes, including the W140, began to covered a 1-year warranty. In the early stages, there were quality issues caused by a large number of uncertified parallel imported cars and repair difficulties caused by a lack of sufficient authorized repair shops.
Sales in 1996 continued the previous year’s mediocre performance, reaching 949 units. However, by this time, the difficulty of purchasing a Mercedes had gradually improved. Mercedes-Benz China began to connect with several large state-owned auto dealerships, allowing customers to pay and place orders directly with agents in mainland China in Chinese currency, without having to convert hard currency or handle import affairs. In 1997, China underwent two major adjustments to its auto import tax rates: the first reduction, which lowered the tax rate to 150% for gasoline-powered cars with a displacement of 3,000 cc or more; then, on October 1, 1997, the tax rate was further reduced to 100%. This boosted sales of the larger displacement S-Klasse, with 2,695 units delivered in 1997 and 1,465 in 1998. This period also introduced the coupe.
After the discontinuation of the W140, it continued to serve as a powerful symbol of Mercedes-Benz in China, maintaining a lasting influence. In 2001, Mercedes-Benz China co-hosted the 6th China Automotive Safety Technology Conference. After the opening ceremony, a series of technical seminars began with the resounding crash test of a W140. This marked the first-ever crash test conducted by Mercedes-Benz in China. Mr. Michael W. Kiehl, president of Mercedes-Benz China, stated, “As 80% of Mercedes-Benz vehicles in China are S-Class, it was natural to select an S-Class for this crash test—specifically an S500. The car chosen for the crash test is identical to the production model and represents the most iconic version of the S-Class on Chinese roads. As one of the world’s most renowned automotive brands, Mercedes-Benz is committed to exchanging automotive technology information with industry professionals in China, and we are dedicated to supporting the long-term development of China’s automotive industry.”
