NEWS

Mercedes pushes China growth in hopes of beating BMW

Monday, Dec 15, 2014

Mercedes-Benz, the world’s third-largest maker of luxury cars, vowed to narrow the gap to Audi and BMW in China to meet a goal of overtaking the German peers in global sales by the end of the decade.

“Our goal to be No. 1 in 2020 is valid, and we must reduce the distance to our competitors in China significantly to achieve this target,” Hubert Troska, head of Chinese operations for Mercedes parent Daimler AG, told reporters at the automaker’s headquarters in Stuttgart, Germany.

China, the world’s largest car market, is set to emerge as the biggest sales region for the new, 200,000-euro ($247,600) Maybach version of the flagship S-Class sedan that Mercedes unveiled in the country last month. The brand has also rolled out a long-wheelbase version of its C-Class model and started offering a chauffeur service on demand that has proved to be popular with customers, Troska said.

Dieter Zetsche, Daimler’s chief executive officer, has set a target for Mercedes to regain the global premium-car sales lead that it lost to BMW AG in 2005. Volkswagen AG’s Audi overtook Mercedes in deliveries in 2011.

Eleven-month sales by Mercedes in China surged 30 percent to 252,800 vehicles, outpacing BMW’s 17 percent increase to 415,200 deliveries and Audi’s 16 percent growth to 516,400.

Daimler and local joint-venture partner Beijing Automotive Group Co. are spending a combined 1 billion euros to more than double Mercedes production capacity at their plant in the Chinese capital to meet rising demand. The project is part of a 4 billion-euro Chinese investment plan that includes widening the Mercedes model lineup to attract a broader group of customers.

The Beijing factory, which builds the C-Class and E-Class sedans and the GLK sport-utility vehicle, will be able to make more than 200,000 autos next year and may be expanded further. The plant will add assembly of the GLA compact SUV in 2015 and offers sufficient space for further expansion, Troska said. Mercedes will widen local production of compact vehicles as sales of the models are likely to rise, he said.

Troska reiterated that Mercedes will sell “significantly more” than 300,000 cars in China in 2015, with the brand’s deliveries in the country likely to exceed its figures for the U.S. as soon as next year.

The carmaker’s success in China was hampered in the past by separate sales organizations for imported and locally-produced vehicles that led to price cuts as the two competed with one another. Daimler revamped Chinese operations two years ago, creating a new management-board position with the appointment of Troska, a former truck-division executive, to emphasize the market’s importance to strategy.

Mercedes is adding 100 dealerships in China this year to widen the sales network to 440 outlets and has opened its first engine factory outside Germany in Beijing.

Daimler, which bought a 12 percent stake in the BAIC Motor division of Beijing Automotive for 625 million euros last year, is “confident” the unit’s planned initial public offering will be successful, Troska says. “We view this positively.”

 

Source : http://www.detroitnews.com/