New legislation focuses on shareholder composition and may annul exemptions of the German brand due to the participation of 19.7% of Chinese investors
Mercedes-Benz may become an accidental target of the U.S. government’s offensive to counter Chinese influence in the U.S. auto industry. A bill in the U.S. Congress — the Motor Vehicle Modernization Act — wants to bar automakers linked to governments considered adversaries, and the protectionist measure could hit the German manufacturer hard.
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The focus of the proposal is not on where the cars are produced. Mercedes maintains a strong industrial presence on American soil: it has been assembling vehicles in Alabama for decades, operates a van factory in South Carolina and employs about 10 people in the country. Recently, it celebrated 5 million units manufactured in the USA and transferred the production of the GLC SUV there.
The obstacle is in the shareholding composition of the headquarters, which brings stakes in BAIC — a state-owned company controlled by the Chinese government — holds just under 10% of Mercedes’ shares. In addition, Li Shufu, president of the Chinese manufacturer Geely, has another slice of almost 10% of the pie.
Five years ago, this would not have been a problem. The legislation provides exemptions for traditional automakers that have been producing in the U.S. for years — but a specific clause nullifies the protection when the company has ownership, direct or indirect, linked to an opposing government. According to CNBC, it is precisely at this point that BAIC’s participation opens up space for questioning.
Mercedes CEO Ola Källenius says he is confident that the issue will be resolved without major drama. The executive says that the company can adjust its ownership structure, if necessary, and is already negotiating with lawmakers to preserve the operation. The American market is vital for the German company, which sold more than 300 thousand passenger vehicles in the country last year and wants to increase the number.
