Daimler AG has agreed to let its Chinese joint venture partner Beijing Automotive Industry. develop its own sedan using the platform of Mercedes' stretched E-class sedan.

The agreement is part of the strategic partnership the two companies signed this month, BAIC executives said at a press conference in Beijing.

Daimler will transfer the E-class vehicle's front and rear axles, and also its platform free to BAIC, Yan Xiaolei, BAIC's spokesman told the press. BAIC will use that technology to develop its own premium model, he said.

The stretched Mercedes-Benz E-class car is currently built in China by Beijing Benz Automobile a joint venture between Daimler and BAIC.

Under the deal signed on February 1, Daimler will acquire a 12 percent stake in BAIC. In turn, BAIC will raise its stake in Beijing Benz to 51 percent, up from 50 percent.

That will allow BAIC to book its portion of the partnership's profits, thus raising the company's value when it launches an initial public offering in Hong Kong.

Aside from the long-wheelbase E-Class, Beijing Benz also makes the C-Class sedan and GLK SUV.

BAIC, which is headquartered in Beijing, also is developing a sedan based on Saab technology that it purchased from the Swedish automaker in 2009.