New Delhi, July 30 -- keep two Chinese investors holding nearly a fifth of the company's shares, and American showrooms may no longer be an option. The German luxury maker is not walking away.

Legislation advanced by Senators Elissa Slotkin of Michigan and Bernie Moreno of Ohio would bar companies with Chinese ownership exceeding 15% from selling connected vehicles in the United States. Mercedes-Benz Group AG, whose two Chinese investors together hold roughly 20% of its equity, crosses that threshold by a margin that leaves little room for creative accounting. The company has pledged to contest the measure at every remaining legislative stage.

The US is among Mercedes' largest and most profitable single markets, underpinning revenue tha...