Daimler AG expects to sell over 300,000 Mercedes-Benz and smart cars in China this year after experiencing stronger sales brought about by many first-time buyers opting for upscale models.
"It's remarkable how many Chinese customers already buy a premium model as their first automobile," said CEO Dieter Zetsche.
The German automaker, the world's third-largest manufacturer of luxury vehicles, projects to sell at least 6.5 percent more than the 281,600 vehicles it delivered in China last year.
Daimler grew faster in the country than rivals last year after restructuring operations and coming out with new models. The company hopes to regain the top spot globally by the end of the decade and would have to catch up to BMW and Audi in China to achieve its goal.
Zetsche believes that the Chinese market will be the deciding market as to who comes out on top in the premium segment. He is confident that Mercedes-Benz can catch up since it still has plenty of room to grow in China.
Daimler's popular new models such as the C-Class and S-Class sedan are selling better than expected and are helping to close the global gap, including in China.
Stefan Bauknecht, a fund manager at Germany's DWS, ascribed the increased sales to its product initiatives from the past two years.
New Mercedes models such as the CLA Shooting Brake compact wagon boosted stronger demand for heavy Daimler trucks that prompted the company to forecast increases in both revenue and operating profits this year.
Daimler plans to boost profitability in the medium term, targeting a 9-percent return on sales after generating a margin of 7.8 percent in 2014.