FRANKFURT (Reuters) -- Daimler is working with rival BMW to build a network of suppliers for new factories in Mexico, said Klaus Zehender, divisional board member for procurement and supplier quality at Daimler's Mercedes-Benz unit.
The move is part of a broader push by Mercedes to deepen its network of local suppliers at factories in China, South Africa, the United States and Mexico.
Earlier this year, BMW and Daimler each revealed plans to invest $1 billion to build a plant in Mexico, to take advantage of the country's growing industrial base and tariff-free access to the U.S. market.
"We have had the BMW cooperation for eight years and it is alive and well. We are looking at how to work together in Mexico. The potential cost savings are around 10 percent," Zehender said.
Zehender said Daimler and BMW work together where they have common interests, such as establishing technical competencies among their suppliers in specific factories.
He declined to elaborate on the extent of the potential cooperation agreement, beside saying that Mexico lacked an established network of suppliers for components that were suitable for premium vehicles.
Zehender said working with BMW to establish a supplier network was part of a broader push to make more components in overseas locations where Mercedes already had a factory.
In the past year, Mercedes starting making the C-class limousine in China, South Africa and the United States in addition to Germany.
With the launch of the new C class, it has already made a push to source 60 percent of a vehicle's components locally, Zehender said.
With future model generations, such as compact cars which are due to be made in Mexico, the proportion of locally-sourced components could rise towards 80 percent, he said. One way to increase the proportion of components purchased locally was to encourage their existing base of suppliers to expand overseas.
"We work intensively with 1,500 suppliers, the majority among them are willing to expand into the world. If one of them has qualms about international expansion, we tell them that this would have the consequence that we have to build up a new competitor," Zehender said.
Mercedes has already formed partnerships with local Chinese companies to help ramp up production of its new C class in Beijing, China, Zehender said. "Some of the Mercedes suppliers in China would be interested in offering their products abroad. I can imagine exporting out of China," he said.
Christiaan Hetzner contributed to this report