Mercedes Takes Another Strategy in the Chinese Luxury Car Market

Giancarlo Perlas February 3, 2014

The performance of Mercedes-Benz in China has been heavily criticized by analysts due to its inability to pick up a significant pace against its major rivals like BMW and Audi. Firms like JD Powers and Macquarie have both given the three-pointed star brand poor reviews in terms of its position in the Chinese luxury car market.

Among the downsides pointed out by analysts about Mercedes in China is that its cars are very expensively priced. Then, Mercedes is often viewed in the country as an old person’s car. They went on to add the fact that Mercedes’ partnership with two competing distribution networks is not making its position in the Chinese luxury car market any better.

Furthermore, the sales of Mercedes in China only saw a small growth when it should have been a great year for luxury car makers in the area due to the sudden rise in demand for high-end vehicles. It was noted by an LMC Automotive research that BMW and Audi did a lot better in 2013 because of their tight grip in the luxury car market of China.

Looking at these negative elements stated by various analysts, it seems like Daimler has a lot to repair in China according to the Wall Street Journal (WSJ).

However, WSJ later mentioned in the report that Mercedes is looking to improve its sales in the Chinese luxury car segment this year by introducing new products and applying new strategies. Reportedly, Mercedes is looking to launch 13 new or refurbished models in the location within the next two years which include a sedan and a compact SUV. All these are aimed to cater to younger buyers.

BAIC, Daimler’s marketing arm with 12% ownership in the Chinese auto company, is expected to strengthen its balance sheets as well by using its share-sale proceeds to further boost its joint venture project with Daimler. WSJ said that this means more localization in the production of Mercedes China to bring down its manufacturing costs and maximize its income.