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China and compact cars top agenda as Mercedes looks to maintain global luxury crown in ’17

Mercedes-Benz back on top of global premium brand rankings four years ahead of time

DETROIT – Now that Mercedes-Benz is back on top as the global leader in luxury vehicle sales four years ahead of schedule, China and compact cars are on top of the agenda as the brand with the three-pointed star reloads in 2017 and looks to preserve pole position.

That was the message from Dr. Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars, and Hubertus Troska, Member of the Board of Management of Daimler AG responsible for Greater China, who spoke to CBU/CAR in an interview on the sidelines of the 2017 North American International Auto Show on January 9 at the Cobo Center in Detroit.

“In recent years, every year we were able to not only meet but beat our specific targets and in some cases our competitors showed less performance than we were expecting. These combined led to the fact that we passed them earlier than we thought,” said Dr. Zetsche. “China is certainly the major contributor in that regard in both elements.”

China was a major contributor to record global sales of Mercedes-Benz in 2016.

The evening before, Dr. Zetsche announced at a pre-show event in Motown that Mercedes-Benz returned to the top of the premium segment in 2016 thanks in large part to the strong growth in China and Europe. It was the most successful year ever and the sixth consecutive year of record sales.  

China was once again the biggest individual market for Mercedes-Benz in terms of both absolute unit sales and growth, with full year sales increasing by 26.6 percent to a record 472,844 units (UPDATE: Mercedes-Benz announced on January 19 in Beijing that full-year sales in China including smart increased 28 percent to 480,944 units), accounting for well over a fifth of the 2,083,888 vehicles sold globally.

“China is really on top of our agenda at Daimler. It’s the most important market we have and we want to make sure that we have even better products and services for China,” said Troska. “Undoubtedly we have a stronger voice in China now as this is the only country represented on the board. The No. 1 priority for us is to understand China and to become more Chinese in China, and it is absolutely necessary for Dieter and the entire board team to listen to our message, then we convert it into new products and actions.”

Mercedes-Benz plans to increase its compact car family range from the current five to eight members.

Products that meet or exceed the expectations of customers is exactly the main catalyst that has driven Mercedes-Benz to success, according to Dr. Zetsche, and that formula will continue to be applied going forward as the brand faces a new year of tougher competition.

“We are certainly happy to be where we are but it’s very clear we start at zero again in 2017. To get there is not easy and to stay there is more difficult,” said Dr. Zetsche.

Helping to sustain momentum will be the compact segment portfolio, which Mercedes-Benz plans to widen from the current five to eight members. That segment has been a significant factor in attracting new customers to the brand, selling more than 2 million units globally since 2012.

“We will clearly expand local presence of our compact cars,” said Dr. Zetsche. Specific details will be announced at the Shanghai Auto Show in April, according to Troska. In all, Mercedes-Benz will launch 15 new or refreshed models in China in 2017.

Asked what other key decisions made over the last several years led to the brand’s current success in China and globally, Dr. Zetsche said it was ultimately down to people.

“It was a good decision to rely on a very young and promising head of design (Gorden Wagener) which I established several years ago, to closely cooperate in developing a design strategy comprehensive for the brand of Mercedes,” said Dr. Zetsche.

In China, the only country represented on the board of Daimler, it was Troska’s appointment a little over four years ago as the responsible board member based in Beijing. “The team of Hubertus and Nick (Nickolas Speeks, president and CEO of Beijing Mercedes-Benz Sales Service Co., Ltd.) seem to be very complementary and a very successful combination,” said Dr. Zetsche.

Mercedes-Benz has plans for each pillar of its CASE strategy in China in 2017.

Troska emphasized that Beijing Benz Automotive Co., Ltd. (BBAC), Daimler’s joint venture with BAIC Group, will continue to expand with more local products. In addition, Mercedes-Benz has plans ahead in China for each pillar of its “CASE” (Connected, Autonomous, Shared and Electric Drive) corporate strategy announced at the Paris Motor Show last September to support its product offensive:

Connected: Intensively working to roll out more digital and connected features in its cars to supplement the Mercedes me initiative launched last year and cater to Chinese customers that are the youngest, most connected and most digital customers the brand has.

Autonomous: Preparing several projects in China and conducting real tests and apply applications made to the Chinese traffic environment.

“We believe autonomous driving will be big in China,” said Troska. “China has a high relevance for autonomous driving and we have upgraded our engineering capabilities with a group (of people) that will focus specifically on autonomous driving.”

“The most recent agreement with Tencent and NavInfo to become partners in our collaborative approach between BMW, Audi and us with HERE, is one element and prerequisite for autonomous driving in China to have high definition mapping there,” added Dr. Zetsche.

Shared: Consolidate car2go and car2share by putting in one management team and roll out the services further in China.

Electric Drive: Invest in locally producing the EQ electric car and further announcements on Denza as a separate local brand in the coming months. “It’s very obvious our electric car strategy under the brand of EQ will be very much China focused and incorporate China local production,” said Dr. Zetsche. “The Chinese government is serious about investing into infrastructure and we will play a strong role there.”

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