Mercedes-Benz - The Wheels Report 2014

With stable management and excellent vehicles, there’s every chance incremental growth will continue.

RESULTS

Hard work has paid off, but needs to stay focused. Momentum and longevity count for plenty at this end of market and Mercedes has full dance card for foreseeable future. With stable management and excellent vehicles, there’s every chance incremental growth will continue.

Sales*: 25,837 (+14.6%)
Rank*: 11th
2014 sales forecast: 30,500
Wheels prediction for 2014: 10th
*To end October 2014

A DECADE ago, Mercedes-Benz was known for limousines and expensive luxury sedans. It still does those but has also found time to drive over BMW’s backyard, its C-Class now ruling the category once dominated by the 3 Series.

At times the C-Class has outsold all mid-sized cars in the country except the Toyota Camry, and even the 2012 arrival of a new 3 Series couldn’t arrest the three-pointed star’s momentum.

Indeed, few brands have embraced downsizing as heartily as Mercedes-Benz. This year the brand has grown almost 15 percent off the back of a new small car range. The A-Class, B-Class, CLA and recently arrived GLA now account for more than a third of Mercedes sales.

But much of Mercedes-Benz’s recent local sales success is down to the positioning of the high-performance AMG brand, which grabs almost 10 percent of Mercedes-Benz passenger vehicle sales. Unlike BMW’s M or Audi’s RS, the AMG brand is sprinkled across almost the entire passenger car range, even making it into some models that really aren’t up to it – G-Class, we’re looking at you.

As well as incrementally growing sales, the AMG onslaught has helped reposition the once staid German brand and cement it as fun, exciting and, crucially, attractive to younger buyers.

The brand has cleverly – but carefully – also given buyers a taste of AMG through the various option packs that include wheels or body kits on regular models.

OPPORTUNITIES

BARELY a month passes when Mercedes-Benz isn’t adding a new body style or variant, and 2015 isn’t shaping up to be much different.

The first step for the year will be bedding in the new arrivals – GLA, S-Class and the best-selling C-Class – and realising their full sales potential. It’s the C in particular that holds most hope, with the Mercedes-AMG-badged C63 version – complete with new twin-turbo V8 – likely to add momentum when it arrives later in the year. Other Mercedes-AMG versions, including the S63 Coupe, will arrive to bolster the top end.

Speaking of the hi-po division, the Mercedes-AMG GT – effectively the replacement for the SLS or Gullwing – should ensure the brand’s image gets an appropriate kick along.

There will also be the CLA Shooting Brake – that’s a wagon to us Aussies – as yet another body style.

But the Mercedes-badged SUV range promises to get the biggest lift in 2015. International speculation suggests the ML off-roader will arrive by the end of the year, renamed as a GLE and bringing with it a coupe version to take on BMW’s X6 and possibly tempt buyers away from the Porsche Cayenne.

But the one Mercedes Australia can’t wait to get its hands on is the GLC, the long-awaited replacement for the left-hand-drive only GLK compact SUV and a car that will finally give Benz a rival to the BMW X3 and Audi Q5 (the Q5 is Audi’s second-best selling model, while for BMW the X3 is third).

Considering Audi and BMW garner 39 and 42 percent of their sales respectively from SUVs, there’s clearly potential for Benz. Of Mercedes’ luxury models, just 18 percent of sales are SUVs.

CHALLENGES

MERCEDES has plenty of momentum in the luxury car market. Combined with more than 100 years of heritage, a reputation for innovation and high levels of safety, it’s difficult to see sales going backwards anytime soon.

That said, the brand is well aware of the challenges in the luxury market. BMW is keen to claw back share and Audi – once the third luxury brand – is within firing distance of the top luxury position in Australia, a target it has set itself for 2020. Then there’s Lexus, which has underperformed but is introducing more competitive luxury cars.

But one of the biggest unknowns is a potential change to vehicle import regulations. The all-but-guaranteed end of the five percent import tariff will have a big impact on $300,000-plus cars but it’s the potential for cheaper imports that has luxury brands such as Mercedes-Benz on edge.

The increase in the value of our dollar means Australia has long been joked of as ‘Treasure Island’ by some car company execs. In short, we pay exorbitant prices for top-end cars, something that has piqued the government’s attention.

There are currently reviews examining the viability of opening the market and allowing more near-new grey imports as well as parallel imports (the same model imported from another right-hand-drive market). While the government says it has “no intention of allowing Australia to become the dumping ground”, any support for opening up imports could have big consequences for the existing luxury status quo.

Score: A

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