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Mercedes tries broad jump

Scoreboard pressure: Mercedes-Benz boss Horst von Sanden. DIGITAL IMAGE: Chris Harris.

Mercedes-Benz says it is no longer focused on the long-running sales battle with BMW

Mercedes-Benz logo6 Nov 2007


MERCEDES-BENZ has reconsidered its approach to luxury-car market leadership in Australia, revealing to GoAuto that it is striving to be number one in a “broader sense” rather than in raw sales terms.

Perhaps in a bid to put an end to the occasional war of words between Mercedes-Benz and its archrival BMW, M-B Australia managing director Horst von Sanden said last week that the company would no longer be pushing as hard to beat its chief rival BMW on the scoreboard.

“After we got sucked in a little bit into this discussion about who is number one, we just thought, ‘How important is it?’ Let’s not strive to be number one no matter what it takes, let’s strive for leadership in a broader sense,” he said.

According to VFACTS figures, Mercedes-Benz has sold 16,193 units to BMW’s 14,731 to the end of October, although this includes 3462 trucks and vans. Once the commercial vehicles are removed, Mercedes-Benz sales are 1343 less than BMW.

Mr von Sanden said taking the number-one spot was not a priority.

“I think after actively thinking about our situation, it is irrelevant,” he said.

Mr von Sanden said Mercedes-Benz did not want to cut its prices to push people into its cars.

 center imageLeft: Mercedes-Benz A-, C- and R-class (bottom).

“If you are seen as the market leader you will be seen as the brand of choice, people will aspire to your brand and to own your products. If you want to have more people, you can only buy them,” he said.

“You can go for an aggressive push strategy, but then you destroy brand equity as well. For us it is a balance to keep enough brand equity, enough aspiration and on the other hand participate in the volume growth.”

Mr von Sanden said his company would remain competitive, but would not offer big discounts to move stock.

“We can’t just close our eyes and say the market is moving but we decide not to participate in it. It has nothing to do with passive arrogance, but it is a realistic judgment on the market competitors,” he said.

Mercedes-Benz and BMW have been fighting over the number-one luxury brand position in Australia for many years, with Mercedes last holding the title in 2002 and 2003.

A public brawl followed in 2004 when both brands claimed leadership. It was a matter of interpretation as to whether SUVs were included in the numbers.

Most experts do include them, which means BMW was number one in 2004 and has been since.

Unlike his opposite number at BMW, who does not rate Audi as a true competitor, Mr von Sanden acknowledged that both Mercedes-Benz and BMW had had to withstand increased pressure from new players in the last few years.

“We can’t underestimate that the luxury segment over the last couple of years has got two new entrants who have to be taken seriously, which is Lexus and Audi,” he said. “The pie is shared by more players, so everyone has to lift their game a little bit and fight a bit harder than they used to.”

Mr von Sanden would not be drawn on whether Mercedes-Benz rivals were discounting to move cars, but indicated he would understand that newer players would have to push harder than his company.

“If you are a newcomer, you need critical mass to get credibility in the market-place,” he said.

“If you enter an established market, you have no choice but to buy market share. If you are an established player like BMW or ourselves, you actually do have a choice because you already have brand equity in the marketplace that you have to protect to a degree. I think it is just a different situation.”

Mr von Sanden said Mercedes-Benz passenger car sales would look a lot better had it not been for a delay in production of Australian C-class cars that saw many dealers run out of previous-model C-class stock two months before the new model arrived.

When asked about the R-class crossover, of which Mercedes-Benz has sold a monthly average of just 24, Mr von Sanden admitted it was not hitting its sales target.

“R-class is an interesting niche model and it was difficult to forecast exactly the kind of volumes we would do in this marketplace. It is maybe, initially, a little like the A-class, when we had forecast a certain volume and it didn’t come immediately,” he said.

“We had to learn what the market potential for this car was. I wouldn’t say we are disappointed, there are a lot of happy R-class owners out there. There is still good demand, but maybe, to be honest, not quite to the level where optimistically we had hoped for.”

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