Ola Kallenius’s new technique of favoring the luxurious vary and dropping some quantity fashions is being harshly criticized by the German Mercedes Sellers Affiliation. A strongly worded letter from the German Sellers Affiliation difficult the inflated costs has been made public. The brand new order scenario is catastrophic. An evaluation by Mercedesblog.com.
In statistics, Mercedes’ scenario is great. On July 11, Mercedes offered the gross sales outcomes for the second quarter of 2023. Mercedes bought within the second quarter of 2023 517,000 models (+6%) and within the first six months of 2023 1,019,200 models (+5%). In the meantime, in Q2 2023, gross sales within the Prime-Finish Luxurious section elevated by 12% to 84,900 models, and gross sales of electrical fashions elevated by 123% to 56,300 models.Within the Core Luxurious vary, gross sales elevated by 2% to 276,600 models, and within the Entry Luxurious section by 11% to 154,100 models.
So, trying on the figures, there are will increase throughout all classes. However issues are removed from rosy. In response to the German auto motor und sport journal, the German Mercedes Sellers Affiliation is harshly criticizing Ola Kallenius’ luxurious technique.
In a four-page letter made public by Enterprise Insider, the German Mercedes Sellers Affiliation addressed Mercedes administration with extraordinarily harsh phrases. The rationale for the sellers’ discontent is the exaggerated worth will increase which have led to a dramatic drop in orders. The superb figures recorded within the first six months of 2023 are the results of older orders, recorded earlier than the value enhance. Now, the order scenario is disastrous, and orders are falling dramatically daily.
German sellers are very adamant that Kallenius’ luxurious technique will lead Mercedes to a serious failure, not less than so far as the German market is worried. The brand new extras coverage can be closely criticized. Lots of the non-compulsory extras can not be ordered individually as earlier than, however solely in very costly packages that enhance costs much more.
Sellers level out that within the extra price-sensitive compact section, they’re going through order cancellations for the Mercedes A-Class and B-Class as a result of new extras coverage of solely providing costly packages as a substitute of particular person choices.
Within the case of the brand new C-Class, this coverage is significantly jeopardizing fleet gross sales in Germany. Significantly with the smaller engines, the Mercedes C-Class was a extremely popular automotive for fleets. However many German corporations have worth limits when shopping for fleet vehicles, and the Mercedes C-Class exceeds these limits. So German corporations are turning to rival Audi A4 and BMW 3 Sequence fashions.
The German sellers’ affiliation additionally says Mercedes is going through a severe picture downside. Non-public clients perceived the brand new luxurious technique as greed. And sellers can’t counter exaggerated costs with reductions.
The unsuitable fleet coverage will have an effect on a number of market segments. Most probably, the Mercedes E-Class will not be the automotive of selection for German taxi drivers as a result of the brand new era will include a lot increased costs. Additionally, Kallenius’ resolution to limit the variety of compact fashions will significantly have an effect on gross sales volumes. The following-generation compact vary will not have a direct successor to the A-Class and B-Class, which is able to result in the disappearance of some younger clients.
Former CEO Dieter Zetsche fought for years to carry the age of Mercedes patrons down from 48 to below 40. The third-generation Mercedes A-Class of 2012 and its successors attracted youthful clients who will disappear and transfer to the competitors from Audi and BMW, who nonetheless provide the BMW 1 Sequence, 2 Sequence Lively Tourer, and Audi A3.
The truth that the Mercedes Sellers Affiliation made the letter public signifies an open battle with Ola Kallenius’s administration, which is outwardly solely inquisitive about making as a lot revenue as potential.The coverage of exaggerated costs has results not solely in Germany but additionally in China in a wider context. Chinese language competitors within the electrical automotive market has led to a dramatic discount in demand for European electrical fashions.
Mercedes has needed to reduce costs in China dramatically as a result of it has bought solely 100 Mercedes EQS models per thirty days on common in a market bigger than the European or American market.Mercedes has subsequently decreased the value of the top-of-the-range Mercedes EQS 580 4Matic by USD 33,000, from USD 167,870 to USD 134,860, which is equal to twenty%. What revenue margin does Mercedes have on the EQS if it may afford to scale back the value by 20%? Kallenius’s technique of promoting very costly fashions as costly as potential is a large failure in China.
Globally, the Mercedes bought solely 19,200 EQS in 2022 in comparison with over 90,000 S-Class. These figures signify 4.5 instances decrease gross sales for the EQS in comparison with the S-Class. As we revealed in our take a look at, the EQS has poorer high quality supplies than the S-Class however is priced increased. In lots of international locations the place subsidies are not given for electrical vehicles, the value distinction between EQS and S-Class with equal energy is important.
And the failure will not be solely within the top-end EQS fashions but additionally within the cheaper Mercedes EQE enterprise limousine. Thus, the newly launched Mercedes EQE has decreased its worth in China from $74,480 to $67,430, which is the equal of 10%.
