The Financial Times reported Tuesday the maker of the Mercedes Benz brand saw sales in China rise 3.5 percent January through July, but that gain was trounced by rival BMW, which saw sales in China rise 18 percent in the same period.
Daimler's new investment in China includes a push to increase production at a facility it operates with its Chinese partner Beijing Automotive to 200,000 vehicles per year by 2015.
Daimler has also slated China for its first engine factory outside Germany and plans to begin production of a lower priced car to expand beyond its traditional affluent customer base, the Times said.
"We fully understand the importance of the China market," said Hubertus Troska, the head of Daimler's operations in China.
"For Daimler's worldwide strategy, to be No. 1 [globally] we need to improve our position in China," he said.
By 2016, he said, he expects China would become "the biggest market in the world for Mercedes-Benz."
"There is no doubt in my mind," he said, even though the market in China has slowed in recent months.
The company's medium-term goal, however, is to bring sales up to 300,000 per year by 2015, up from 206,150 sold in 2012, the Times said.