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Mercedes first-timers flock to new A-Class

Conquest: Mercedes-Benz dealers are getting younger buyers hooked on the brand earlier with the desirable but relatively affordable new A-Class.

New A-Class attracting Mercedes-Benz virgins, some opt for B- or C-Class instead

Market Insight logo20 Mar 2013

UPDATED: 21/03/2013 MERCEDES-BENZ has already experienced the effects of its new A-Class attracting new customers to the brand in Australia.

Speaking at the official A-Class launch in Melbourne recently, Mercedes-Benz Australia (MBA) senior corporate communications manager David McCarthy said around 50 per cent of the 1000 people who pre-ordered an A-Class had never owned a Mercedes before.

MBA managing director Horst von Sanden added that A-Class enquiry had in some cases led to customers driving away in larger models.

“We have evidence already in the early days that customers came in clearly with the idea to buy an A-Class and drove out with a B or a C (Class),” he said.

“They came in, probably for the first time to Mercedes-Benz triggered by the new A-Class, and saw that ‘Yes it is a great car, but this one suits us a bit better’ and took another one.” Drawing new customers to the brand is great news for Benz, especially as the relatively affordable, sporty A-Class appeals to a younger demographic. In markets that received the A-Class before Australia, the average buyer is in their late 30s.

“Every car company has the same ultimate goal, which is the customer for life and it is no different with us, we just want to get them a bit earlier now,” said Mr von Sanden.

128 center imageLeft: Mercedes-Benz Australia managing director Horst von Sanden.

Mr McCarthy pointed out that because top-end A-Class and B-Class variants occupy the $50,000 price range, customers jumping directly to a C-Class (from $58,600 plus on-road costs) does happen.

“People who come in (to Mercedes dealerships) have actually got the luxury of choice so it’s an A-Class they might want, or a B-Class or C-Class so in that price bracket they are pretty much spoilt for choice.” He added that with 6676 sedan and wagon sales last year, the C-Class beat the Mazda6 (6558) and Honda Accord Euro (6155) to become Australia’s second-best selling mid-sized car after the Toyota Camry (27,230).

“If you look at markets for cars this (A-Class) size around the world they are growing and there is an increasing desire among consumers for a more premium product so people that come into an A-Class, eventually they will progress to a C-Class or E-Class,” said Mr McCarthy.

Mr Von Sanden said he was confident of selling at least 200 A-Classes per month this year, meaning the C-Class will remain the brand’s volume leader – but the A-Class is a “central pillar” to the company’s growth strategy.

A-Class sales will be limited by supply this year until production is freed up in 2014 and the flagship all-wheel-drive A45 AMG – for which Benz already holds more than 100 pre-orders in Australia – will be allocated separately.

“If people are prepared to wait they will get a car but it is a constant discussion with Stuttgart to get more cars,” said Mr McCarthy. “We are trying to get our hands on as many cars as we can but demand is higher than supply.” Mercedes discontinued the previous-generation A-Class in January 2010, throwing its weight instead behind the B-Class with a revised range that included a new entry point to the star-spangled brand with a B180 variant priced from $36,990.

The company told GoAuto later that year that the similarities between the A and B series was confusing for customers, and that the stronger sales it subsequently experienced with the B-Class – which were more than A and B combined – vindicated its decision to cull the A.

The new generation of both model classes has brought substantial improvements and, crucially, more differentiation between them, with the second-generation B-Class launched in April last year taking a similar route to the original – albeit with vast improvements – and this year’s A-Class marking a complete reinvention with a more conventional sports-prestige hatch body style.

The new A has also brought with it aggressive pricing and a strong value position with high levels of equipment and a starting price of $35,600, which not only undercuts its key German rivals in the BMW 1 Series and Audi A3 but places it alongside or within striking distance of several mainstream European and even Japanese brands.

B-Class sales are now consistently above 2000 units per annum, having never broken through that mark until 2011 – the year after the A-Class was discontinued – while the C-Class, a new generation of which is due in 2014, has remained steady as Mercedes’ top-seller with more than 6000 sales a year since 2008.

This year, the C-Class is down 21.7 per cent after the first two months of trading, to 782 units, while the new A and B are gaining momentum, recording 343 and 353 new registrations respectively last month (both within 40 units of C-Class, on 381) to be at 369 and 570 units YTD.

The E-Class, which has been a steady performer for Mercedes over the years and will soon be upgraded, is also up 6.5 per cent YTD.

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