"The all-new E-Class is the most important launch for Mercedes-Benz this year, and probably, in the next two years," said Klaus Maier, president and CEO of Mercedes-Benz (China) Ltd, which plans to produce the premium sedan locally from next year.

The company launched the business sedan yesterday in Shanghai, China's financial hub. The model will compete with the locally produced Audi A6L and BMW 5-series in China's premium sedan market.

Mercedes' joint venture Beijing Benz-DaimlerChrysler Automotive Co Ltd (BBDC) will start manufacturing the sedan from next year. The production of previous versions of the E-Class was stopped from February this year.

According to Gunter Butschek, president and CEO of BBDC, the local production process of the new E-Class sedan was kicked off in July 2007. Some of the imported equipment for the production line would undergo testing in the next few weeks, he said.

"We also had made full preparation for sourcing domestic parts to meet Mercedes' global standards as well as the Chinese government's requirement for localization," said Ulrich Walker, chairman and CEO of Daimler Northeast Asia.

The E-Class sedan, which hit the European market in April, has grabbed over 60 percent of the medium-sized premium market in Germany, said Walker.

"From its first appearance at the Shanghai auto show, the E-Class has amassed over 6,000 pre-orders across the country, further building our confidence in China's luxury auto market," said Maier.

To meet increasing local demand, Mercedes is planning to add 20 to 25 dealerships per year in the future, up from the current 125 dealerships distributed across 65 cities.

Zhong Shi, an independent auto analyst, said that the medium-sized segment was very important for premium sedan producers in China, especially since locally produced models could become part of the government vehicle purchase program.

"The brisk sales of the E-Class sedan can support Mercedes-Benz' bright and stable development in China's premium sedan market," said Zhong.

In the first half of 2009, Mercedes sold nearly 27,000 luxury vehicles in China, a 50 percent jump over last year, far outpacing the 12 percent growth rate of the total luxury auto market.

"Our diversified product strategy has helped us to continue meeting customer demand, and to drive sales. We are bringing more products to the China market, with different market positioning and are targeted at a wide range of customer groups," said Maier.

"This strategy has proven to be very popular among customers, and this success has played a key role in contributing to our sales achievements in the past six months."