GUANGZHOU – The expansion of dealer network and launch of new models especially locally made products have been the key driving force behind Mercedes-Benz’s record growth in China this year, where sales have already exceeded the annual target of 300,000 units, according to Hubertus Troska, member of the board of management of Daimler AG responsible for Greater China and Chairman & CEO of Daimler Greater China Ltd.
Troska spoke to CBU/CAR on the sidelines of Auto Guangzhou 2015 on November 20, a day after the brand with the three-pointed star launched its latest model to market: the GLC midsize SUV produced by Beijing-Benz Automotive Co., Ltd. (BBAC), the joint venture between Daimler and partner BAIC Group.
Troska pointed to specifically a healthy OEM-dealer relationship as a key lever behind Mercedes-Benz’s 34 percent growth in sales through to October, making China its largest global market despite weakened market conditions.
“The bond between our dealers and Mercedes-Benz is very strong,” said Troska. “They have the confidence in the products we are showing them, they have confidence in the management team and they follow us and invest. Without the dealers we will not be successful in China.”
In fact, by the end of this year Mercedes-Benz will have roughly 500 dealer outlets in China, at par more or less with major German competitors.
But Troska stressed that the future focus would be on qualitative growth, rather than simply adding more dealers, as the number has reached a sufficient level. “Our focus will be on training, further improvement of customer experience, sales and aftersales to deliver that premium experience to Chinese customers. That is more important than adding many more dealers,” said Troska.
On the products side, the locally produced C-Class Long Wheelbase, E-Class Long Wheelbase, GLK (which is giving way to the GLC) and GLA have all been well received by Chinese consumers. Together they account for nearly two-thirds (65 percent) of Mercedes-Benz sales in China. “It is clear and I am convinced that to be successful in China you need to locally produce,” said Troska. “Whenever we reach a certain volume potential for a car line, we will localize it, but the volume must justify it.”
China for example, has already become the No. 1 single market globally for the GLA and GLK and sales of the entire SUV family have grown 41 percent so far this year.
Good products, more customer orientation, right features and design language, according to Troska, are finding acceptance all over the world, helping Mercedes-Benz to outpace German competitors in sales growth (up 15 percent to 1.5 million units globally through to October). “The strongest contribution in 2015 is really coming out of China,” said Troska, who remains positive about market prospects in China next year without giving specific numbers. “Overall potential of the passenger vehicle market is still good. Premium will do well and 2016 is going to be a good year for Mercedes-Benz. This is still a very healthy market. It’s not going to be double-digit every year, but it still is the best car market to be in the world.”
Troska sees momentum in the new energy vehicle pick up significantly so far this year with strong government and regulatory push, and Mercedes-Benz is prepared to increase its range of NEVs. In fact, the brand launched the locally produced C 350 e L, the first plug-in hybrid in its segment, as well as the imported S 500 e L in Guangzhou.
Asked about how he sees competition from new players such as LeTV and NextEV, Troska told CBU/CAR that these new players should not be underestimated and this dynamic in China is much faster than in other markets. “But building cars is not that easy,” said Troska. “We are actively looking at cooperation with these companies because I don’t think they really want to build cars.”
Troska is bullish on autonomous driving, one of the hottest topics in the industry today, and is convinced that it will come much faster than some people think. Features such as automatic steering, braking and acceleration are already available on many luxury brand models and they will eventually trickle down to mass brands, according to Troska. In fact, he believes that China may be even faster on this front as it is more open to innovative technologies with the young customer base and he is pushing for R&D to bring autonomous driving features into China.
“The overall strategy from our CEO Dr. Dieter Zetsche and Thomas Weber (board member for R&D) is that we will strengthen Chinese R&D in the future with or without acquisitions,” said Troska in response to a question on future investment plans in China. “We should be the company that best understands what the Chinese consumers want and I’m deeply convinced that we need to have a much stronger local R&D base, which contributes to our understanding of what features our Chinese customers really like.”