China will remain Mercedes-Benz’s biggest growth market in the next decade, Daimler CEO says

Daimler’s chief executive said China will remain Mercedes-Benz’s biggest growth market in the next decade, and that the German carmaker will adjust its production locations to capture shifts in demand as global trade tensions continue to rise.

The remarks by Ola Kaellenius come against a backdrop of increasingly strained relations between the United States, China and Europe after almost a decade of growth that has helped Mercedes emerge as the world’s biggest-selling luxury car brand.

“The situation has become much rougher, with a tendency towards rougher talks, right up to and including trade conflicts,” Kaellenius said late on Monday. “We need to look at our production footprint and where it makes sense, shift our production.”

But with international trade tensions on the rise, the outlook for global sales remains uncertain. Britain’s Brexit negotiations could end without tariff-free trade with the European Union and serves as an example of how things can go wrong, the Swedish executive said. “I am hoping for last-minute common sense,” Kallenius added.

If Britain and the EU fail to clinch a deal, World Trade Organization (WTO) rules will apply, resulting in tariffs. “In the event of a so-called hard Brexit, we would not open factories, because this would not be worth it, given our sales numbers,” Kaellenius said, referring to sales in Britain. “We would have to learn to live with WTO rules.”