One of Germany’s most storied industrial icons just became more Chinese.

Daimler AG’s Chinese partner, state-backed Beijing Automotive Group Co., is buying a 5-per-cent stake in the Mercedes-Benz maker, cementing a more than decade-long alliance of the auto manufacturers.

Together with Daimler’s top shareholder — Zhejiang Geely Holding Group Co.’s billionaire owner Li Shufu — the transaction would take Chinese ownership in the world’s biggest luxury-car maker to almost 15 per cent.

“This step reinforces our successful partnership and is a signal of trust in the strategy and future potential of our company,” Daimler Chief Executive Officer Ola Kallenius said.

BAIC’s investment another sign of the fast-changing global car industry with deepening partnerships and deals with rivals. Margins at the core Mercedes-Benz cars division are expected to fall as low as 3 per cent this year, trailing typically lower-returning mass-market carmakers.

About half of the stake being taken by BAIC, which is backed by Beijing’s municipal government, is via rights to acquire shares and the remainder via financial instruments, according to a statement. The 5-per-cent holding has a market value of about 2.5 billion euros (US$2.8 billion) as of Monday close.

Another Chinese shareholder at one of Germany’s automotive giants could stir concerns about influence in the country, while carmakers already battle a trade war that has left global shipments of cars at the mercy of tit-for-tat tariff measures. China and the U.S. are the two largest markets for Mercedes-Benz. BAIC’s transaction also raises the question of whether Daimler and BAIC may reorganize their joint venture in China after restrictions for foreign investors in the world’s largest auto market eased.

For its part, BAIC views the purchase as a natural evolution of its relationship with Daimler.

“It has been our intention to strengthen our alliance with Daimler through an investment,” said Heyi Xu, chairman of BAIC. “This step reinforces our alignment with, and strong support for, Daimler’s management and strategy.”

Daimler is exploring additional cooperation projects with Geely, former CEO Dieter Zetsche said at the company’s annual general meeting in May and sought to allay concerns about potential conflicts with BAIC. His successor Kallenius said in January he’s “open to talk” about more collaboration with industry peers and technology firms to share surging development cost.

Since 2003, BAIC and Daimler have set up a number of cooperations in China, including the joint venture Beijing Benz Automotive Company that produces premium cars in the country, as well as separate entities that make vans and trucks. Daimler has held a 9.6-per-cent stake in the BAIC’s Hong Kong-listed unit, BAIC Motor Corp., since 2013.