Beijing Automotive Industry, signed an equity-swap agreement with its joint venture partner Daimler AG on February 1st, to strengthen their partnership, according to Chinese media.

BAIC chairman Xu Heyi is in Germany to sign the deal, reported a local media, citing sources close to the company.

The deal will permit BAIC to raise its interest in Beijing Benz Automobile Co., a 50-50 joint venture between BAIC and Daimler, to 51 percent. That would leave Daimler with a 49 percent stake.

A majority stake will enable BAIC to consolidate the joint venture's figures into its financial report when it goes public in Hong Kong later this year.

The Chinese automaker has hired Goldman Sachs Group and Morgan Stanley for a 6.3 billion yuan (US$ 1 billion) initial public offering, according to a local daily. The deal also will allow Daimler to acquire a stake in BAIC after the Chinese company goes public.

Further details of the agreement remain unknown, the newspaper said.

Beijing Benz builds the Mercedes-Benz E-Class, C-Class and GLK models in China. The joint venture generates about half of Daimler's total sales in China.

Daimler also runs a truck joint venture with Beiqi Foton Motor, a BAIC subsidiary. Both joint ventures are headquartered in Beijing.

Last year, Mercedes-Benz' sales of passenger vehicles in China rose only 2 percent to 196,211 units. Mercedes shook up management after it failed to keep pace in China with rivals BMW AG and Audi AG.

In 2012, Audi sales in China jumped 30 percent to 405,838 vehicles, topping all luxury brands. BMW Group sales in China rose 40 percent to 326,444 vehicles.