Daimler AG’s Mercedes-Benz is accelerating its dealer expansion in China and streamlining sales to fix past missteps that have contributed to a growing gap with Bayerische Motoren Werke AG and Audi AG.
“We spent a lot of time looking at what went wrong in the past,” Hubertus Troska, the newly appointed head of the German manufacturer’s Chinese operations, said at the Shanghai Motor Show. “Among the first things, I did was to go out, visit dealers and do some mystery shopping.”
Mercedes lost the global luxury-car sales lead to BMW in 2005 and ceded second place to Volkswagen AG’s Audi brand in 2011. The Stuttgart, Germany-based manufacturer shifted Troska in December from running the Mercedes heavy-truck operation to overseeing a reorganization of business in China as part of Chief Executive Officer Dieter Zetsche’s plan to retake the top spot in the luxury-car industry.
An attendee takes a photograph of the Daimler AG Mercedes-Benz SLS AMG vehicle on display during the Seoul Motor Show in Goyang on March 28. (Bloomberg)
Mercedes has been lagging further behind Munich-based BMW and Ingolstadt, Germany-based Audi in global sales in the past year, mainly because it underperformed in China. Deliveries by Mercedes in the country rose 1.5 percent in 2012, hampered by a 19 percent drop in December. That compares with Chinese sales growth exceeding 29 percent at BMW and Audi.
The difference has widened this year, with first-quarter Mercedes sales in China dropping 12 percent to 45,440 cars and sport-utility vehicles versus a 7.5 percent gain to 86,224 deliveries for BMW and a 14 percent jump to 102,810 at Audi.
“Daimler needs to catch up in China, structurally as well as from a volume point of view,” said Christoph Stuermer, a Frankfurt-based analyst at IHS Automotive. “They have significantly fewer showrooms in China than BMW and Audi, and the dealer organization is too slow in reacting to demand.”
Daimler will show its progress on Wednesday, when it’s scheduled to release first-quarter results. Earnings before interest and taxes are projected to tumble 51 percent to 1.05 billion euros based on the average of seven analyst estimates compiled by Bloomberg.
The German manufacturer earlier this month said it would update its 2013 targets with its quarterly report after many auto markets started the year weaker than expected. The company forecasts higher earnings in the second half than the first, lifted by new models such as the CLA four-door coupe.
(Bloomberg)
