Mercedes Loses Ground to BMW, Audi in Luxury Sales Race
By Dorothee Tschampa -
Oct 10, 2012 1:00 AM GMT+0300
Daimler AG (DAI)’s Mercedes-Benz is
falling further behind in the luxury car contest.
Burdened by a disjointed strategy in China, sluggish expansion of entry-level models and an aging S-Class sedan, the once-dominant upscale nameplate has slipped deeper into third place. The Mercedes sales gap to Volkswagen AG (VOW)’s Audi has more than doubled within a year, hampering Chief Executive Dieter Zetsche’s pledge to retake the lead.
“Mercedes’s problems are home-made problems,” said
Christian Ludwig, an analyst with Bankhaus Lampe in Dusseldorf.
“It’s going to be extremely difficult for Mercedes to reach the
No. 1 spot. The others are not sleeping.”
Stuttgart, Germany-based Mercedes delivered 964,900 cars and sport-utility vehicles worldwide through the first nine months of 2012. The 5 percent gain failed to keep pace with rivals, meaning it lagged Audi by 132,600 vehicles, up from 53,900 a year ago. The gap to BMW widened 41 percent to 145,000 vehicles, according to data from the carmakers.
In September 2011, Zetsche sought to cap the celebrations for the automaker’s 125th anniversary by setting the goal for Mercedes to become the best-selling and most profitable luxury- car brand by 2020. At the time, he said it was “impossible” for the brand to accept being third.
Mercedes has been trailing since losing the top spot in the luxury-car segment to BMW in 2005. The Daimler unit’s sales will have advanced 19 percent through this year, compared with a 31 percent jump by BMW and a 70 percent surge by Audi over the past seven years, according to IHS Automotive estimates.
The failure to keep pace is reflected in the stock. Daimler’s 12 percent increase over the past 12 months trails BMW’s 18 percent gain and Volkswagen’s 44 percent surge. Daimler trades at 7.5 times estimated earnings versus 8 times for BMW.
Zetsche is seeking to reverse the trend by adding less- expensive compact models, including a four-door coupe and a sport-utility vehicle, to attract younger buyers and by expanding the range of variants of the S-Class flagship, which is in the last year of the current generation.
“Daimler is saying that the demand for its new A-Class is great, but these are mostly orders from dealers,” said Hans- Peter Wodniok, analyst at Fairesearch in Kronberg, Germany. “The price of the compact is quite high, and it remains to be seen if the market accepts it.”
Even with the premium price, Daimler is preparing for high demand, signing up Finland’s Valmet Automotive Inc. to produce more than 100,000 A-Class cars. The external production is on top of 1.4 billion euros spent to upgrade a small-car factory in Germany and build a new one in Hungary.
Daimler plans at least five compact models in the coming years including the newly introduced A- and B-Class cars to take on models like the BMW 1-Series coupe and the Audi Q3 SUV.
To reach that goal, Mercedes will need to boost growth in China, where deliveries edged up 6.7 percent this year, compared with gains of more than 30 percent for BMW and Audi.
“China is definitively a problem area,” said Marc-Rene Tonn, a Hamburg-based analyst with Warburg Research. “They have to take action.”
For a start, Zetsche is combining two separate sales units -- one for imported vehicles and other for locally made cars -- into a single entity. Sales chief Schmidt said the goal of the restructuring is to grow “significantly” in China again.
Mercedes’s efforts to expand its appeal with new models and re-spark growth in China are expected to bear fruit and offset plans by BMW to add a factory in Brazil and by Audi to expand in Mexico. IHS forecasts Mercedes increasing sales 34 percent between 2012 and 2015, compared with Audi’s 12 percent gain and BMW’s 26 percent rise.
“Globally, the relatively old product range weighs on sales,” said Frank Schwope, an analyst at Norddeutsche Landesbank in Hanover. “The current revamp of the A-Class and soon of the S-Class will have a positive effect.”
To contact the reporter on this story: Dorothee Tschampa in Frankfurt at dtschampa@bloomberg.net
To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net
Burdened by a disjointed strategy in China, sluggish expansion of entry-level models and an aging S-Class sedan, the once-dominant upscale nameplate has slipped deeper into third place. The Mercedes sales gap to Volkswagen AG (VOW)’s Audi has more than doubled within a year, hampering Chief Executive Dieter Zetsche’s pledge to retake the lead.
Enlarge image
Mercedes Loses Ground in Luxury Race as Audi Doubles Gap
Balint Porneczi/Bloomberg
Since Mercedes lost the
top spot in the luxury-car segment to BMW in 2005, the Daimler unit’s
sales are forecast to advance 19 percent this year, compared with a 31
percent jump by BMW and a 70 percent surge by Audi, according to IHS
Automotive.
Since Mercedes lost the top spot
in the luxury-car segment to BMW in 2005, the Daimler unit’s sales are
forecast to advance 19 percent this year, compared with a 31 percent
jump by BMW and a 70 percent surge by Audi, according to IHS Automotive.
Photographer: Balint Porneczi/Bloomberg
Sept. 27 (Bloomberg) --
Dieter Zetsche, chief executive officer of Daimler AG, discusses orders
for the Mercedes SLS AMG electric car, cost-cutting plans and the impact
of the European debt crisis on the region's auto industry.
He speaks from the Paris Motor Show with Mark Barton on Bloomberg
Television's "The Pulse." (Source: Bloomberg)
April 9 (Bloomberg) --
Daimler AG debuts its 2013 Mercedes-Benz SL 65 AMG roadster at the 2012
New York International Auto Show.
Daimler says the car features a twin-turbo 6-liter V-12 engine that
makes 621 horsepower and 738 pound-feet of torque. (Source: Bloomberg)
April 9 (Bloomberg) --
Daimler AG debuts its redesigned 2013 Mercedes-Benz GLK Class
sport-utility vehicle at the 2012 New York International Auto Show.
(Source: Bloomberg)
March 6 (Bloomberg) --
Daimler AG's Mercedes-Benz will kick off its effort to regain lost
ground in the luxury-car race with a sporty A-Class hatchback targeted
at users of Apple Inc.'s iPhone.
Elliott Gotkine reports from the Geneva Motor Show on Bloomberg
Television's "Countdown" with Owen Thomas and Linzie Janis. (Source:
Bloomberg)
Jan. 13 (Source: Bloomberg)
-- Daimler AG debuts its 2013 Mercedes-Benz 300 and 400 E-class luxury
hybrid sedans at the 2012 North American International Auto Show in
Detroit. (Source: Bloomberg)
Enlarge image
Mercedes Loses Ground in Luxury Race as Audi Doubles Gap
Tim Rue/Bloomberg
Mercedes delivered 964,900 cars and sport-utility vehicles worldwide through the first nine months of 2012.
Mercedes delivered 964,900 cars
and sport-utility vehicles worldwide through the first nine months of
2012. Photographer: Tim Rue/Bloomberg
Enlarge image
Daimler AG Chief Executive Officer Zetsche
Jason Alden/Bloomberg
The growing sales gap
follows a profit warning last month, when Daimler AG Chief Executive
Officer Zetsche said earnings before interest and taxes at the Mercedes
car division would fall and not match last year’s figure like the
company previously forecast. Photographer:
The growing sales gap follows a
profit warning last month, when Daimler AG Chief Executive Officer
Zetsche said earnings before interest and taxes at the Mercedes car
division would fall and not match last year’s figure like the company
previously forecast. Photographer: Photographer: Jason Alden/Bloomberg
Enlarge image
Mercedes Loses Ground in Luxury Race as Audi Doubles Gap
Jason Alden/Bloomberg
Daimler's Mercedes-Benz A-Class hatchback lured 700,000 people to showrooms when it went on sale last month.
Daimler's Mercedes-Benz A-Class
hatchback lured 700,000 people to showrooms when it went on sale last
month. Photographer: Jason Alden/Bloomberg
Stuttgart, Germany-based Mercedes delivered 964,900 cars and sport-utility vehicles worldwide through the first nine months of 2012. The 5 percent gain failed to keep pace with rivals, meaning it lagged Audi by 132,600 vehicles, up from 53,900 a year ago. The gap to BMW widened 41 percent to 145,000 vehicles, according to data from the carmakers.
In September 2011, Zetsche sought to cap the celebrations for the automaker’s 125th anniversary by setting the goal for Mercedes to become the best-selling and most profitable luxury- car brand by 2020. At the time, he said it was “impossible” for the brand to accept being third.
Profit Drop
One year on, Zetsche’s tone was less jubilant. He said Sept. 20 earnings before interest and taxes at the Mercedes car division would fall and not match last year’s figure. In response, the manufacturer is planning a savings drive dubbed “Fit for Leadership.” At the Paris car show last month, Zetsche didn’t reaffirm a Mercedes’s target for 2013 operating profit of 10 percent of sales.Mercedes has been trailing since losing the top spot in the luxury-car segment to BMW in 2005. The Daimler unit’s sales will have advanced 19 percent through this year, compared with a 31 percent jump by BMW and a 70 percent surge by Audi over the past seven years, according to IHS Automotive estimates.
The failure to keep pace is reflected in the stock. Daimler’s 12 percent increase over the past 12 months trails BMW’s 18 percent gain and Volkswagen’s 44 percent surge. Daimler trades at 7.5 times estimated earnings versus 8 times for BMW.
Zetsche is seeking to reverse the trend by adding less- expensive compact models, including a four-door coupe and a sport-utility vehicle, to attract younger buyers and by expanding the range of variants of the S-Class flagship, which is in the last year of the current generation.
Dealer Traffic
The new A-Class hatchback lured 700,000 people to showrooms when it went on sale last month. The company has about 70,000 orders so far for the car, which starts at almost 24,000 euros ($31,000) compared with about 17,000 euros for the segment- leading VW Golf.“Daimler is saying that the demand for its new A-Class is great, but these are mostly orders from dealers,” said Hans- Peter Wodniok, analyst at Fairesearch in Kronberg, Germany. “The price of the compact is quite high, and it remains to be seen if the market accepts it.”
Even with the premium price, Daimler is preparing for high demand, signing up Finland’s Valmet Automotive Inc. to produce more than 100,000 A-Class cars. The external production is on top of 1.4 billion euros spent to upgrade a small-car factory in Germany and build a new one in Hungary.
Daimler plans at least five compact models in the coming years including the newly introduced A- and B-Class cars to take on models like the BMW 1-Series coupe and the Audi Q3 SUV.
Filling Gaps
“We have holes in our portfolio that we are closing successively,” Joachim Schmidt, Mercedes’s sales chief, said in an e-mail response to questions. “When I look into the future, I see that we have excellent prerequisites to be the leading premium manufacturer by the end of the decade.”To reach that goal, Mercedes will need to boost growth in China, where deliveries edged up 6.7 percent this year, compared with gains of more than 30 percent for BMW and Audi.
“China is definitively a problem area,” said Marc-Rene Tonn, a Hamburg-based analyst with Warburg Research. “They have to take action.”
For a start, Zetsche is combining two separate sales units -- one for imported vehicles and other for locally made cars -- into a single entity. Sales chief Schmidt said the goal of the restructuring is to grow “significantly” in China again.
Mercedes’s efforts to expand its appeal with new models and re-spark growth in China are expected to bear fruit and offset plans by BMW to add a factory in Brazil and by Audi to expand in Mexico. IHS forecasts Mercedes increasing sales 34 percent between 2012 and 2015, compared with Audi’s 12 percent gain and BMW’s 26 percent rise.
“Globally, the relatively old product range weighs on sales,” said Frank Schwope, an analyst at Norddeutsche Landesbank in Hanover. “The current revamp of the A-Class and soon of the S-Class will have a positive effect.”
To contact the reporter on this story: Dorothee Tschampa in Frankfurt at dtschampa@bloomberg.net
To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net
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