Mercedes-Benz confronts ‘little surprises’

Sales of Mercedes-Benz passenger cars and SUVs are over 2000 units down from the same time last year. And that’s a further drop from the decline of nearly 5000 units for the full year, 2018.

Mercedes-Benz is not by any means the only brand to witness a reversal of fortunes in the local market, but the falls in 2018 and 2019 have been higher than the market average for this year, to date.

“It’s a bit tough out there,” Mercedes-Benz Australia CEO, Horst von Sanden admitted to local journalists during the launch of the updated 2019 Mercedes-Benz GLC SUV.

“You can just read the facts and figures; it’s I think the 17th or 18th month now of a declining market. And in a country where we have been used to 27 years [of] uninterrupted growth, this may be a little bit more difficult to get used to it [and] handle it properly, than in a country which has a crisis every two years, like for example Turkey...

“When I whinge and complain in our global meetings, my colleague from Turkey always looks at me and says ‘What are you going on about?’

“So it’s all relative from that perspective.”

Mercedes-Benz has retained its market share in the local market though, “which is the most important thing,” von Sanden notes. Benz has held around three per cent of the market over the period – 3.1 per cent in 2017, 2.8 per cent in 2018 and back up to 2.9 per cent for the current year to date.

“We can’t manage the available pie, but we can manage that we get our fair share of it.”

Beyond the market-based fluctuations that have also hit other brands – including Mazda – Mercedes-Benz can point to issues in addition to tighter lending restrictions and slower economic growth as reasons for its disappointing sales performance.

“We’ve had a few other little surprises along the way...” von Sanden said obliquely, before quipping that journalists would not be served escargot for dinner.

The quip was a reference to the recent news that infestations by an exotic snail had delayed delivery of Mercedes-Benz cars bound for Australian customers. According to von Sanden, some ships infested with the snail have had to be sent back to their port of origin three times. The delay between customers placing the orders and receiving their new car is reportedly extended by around three months as a consequence of the pest.

And the means of eradicating the snails is not without risk. The method amounts to sealing the cars hermetically and pumping gas in and around them, with the possibility that the vehicles may be damaged in the process.

And stink bug breeding season is practically upon us too, von Sanden noted.

“There is a few unexpected things happening around our business at the moment that we just need to manage...”

Another challenge for Mercedes-Benz is the new WLTP certification regime, which has not hit Benz as hard as other prestige brands, but as von Sanden noted, it has had an incremental effect like the market forces (and the snails), adding up to significant difficulty for the brand to maintain its market share and build sales. But the Benz boss remains upbeat.

“We never lose our optimism; I think there will be better times ahead and the economy will recover. The consumer confidence will come back...”

Our review of the updated Mercedes-Benz GLC will be published on November 15