(Yicai Global) May 15 -- Auto retailer China Grand Automotive Services Co. will buy five Mercedes-Benz sales, service, spare parts and surveys (4S) showrooms in northern China from rival Pangda Automobile Trade Co. in a bid to lift its proportion of luxury brands and expand its North China sales network.

China Grand Auto and Pangda both announced the deal yesterday.

The former will invest CNY1.25 billion (USD196 million) to take all shares of the Benz 4S showrooms.

The outlets lie in Chifeng in the Inner Mongolia Autonomous Region, the cities of Dezhou and Jinan in Shandong province and Tangshan and Handan in Hebei province, respectively.

The five venues saw annual operating income between CNY309 million and CNY619 million last year, with net profits between CNY16.33 million and CNY16.20 million, while their operating income for January and February 2018 lay between CNY66 million and CNY120 million, with net profits between CNY2 million and CNY5.2 million, the announcements stated.

China Grand Auto's distribution network encompasses 28 provinces, autonomous regions and municipalities directly under the central government. The company sells passenger vehicles in over 50 brands and operates 800 outlets, including 737 4S ones, public data show.

German luxury cars such as Daimler AG's Mercedes-Benz, the BMW brand of Bayerische Motoren Werke AG and Volkswagen AG's Audi are the most popular luxury car brands among Chinese consumers.

This deal will yield CNY616 million in pretax profits, the company predicts.

Pangda gained operating income of CNY70. 5 billion last year, an annual increase of 7 percent, whereas its net profit distributed to shareholders fell 44.45 percent to CNY212 million, public data show.

Luxury car sales still show no signs of stalling in China any time soon.

Editor: Ben Armour