Daimler, which is overhauling its Mercedes-Benz dealership operations, said it would sell sales outlets in eastern Germany to China's Lei Shing Hong Group (LSH), the world's largest Mercedes dealership.

Daimler has said it plans to sell around a quarter of its around 160 Mercedes dealerships, which account for about half of the brand's car sales in Germany.

Lei Shing Hong is expanding in Germany as it seeks to learn how to operate in a mature market.

In China, demand is cooling after years of growth that turned the country into the world's biggest car market, and that is forcing dealers in China to look beyond sales of new cars to generate revenue.

Germany's car dealership model includes healthy profits from selling used approved vehicles and revenue from vehicle parts.

LSH's subsidiary Stern Auto GmbH will buy dealerships in the cities of Leipzig, Dresden, Magdeburg, Schwerin, Rostock, Valluhn and Upahl, Daimler said, but did not give a purchase price.

"It is our clear intention to continue the business with continuity and stability and to be a reliable partner for customers and employees in the future," said Wolfram Geisler, managing director at Stern Auto.

In January, Lei Shing Hong bought the Russ & Janot, a Mercedes dealership group with outlets in Weimar, Erfurt and Arnstadt.-Reuters