Mercedes follows changing market to win in China

World premiere of the Mercedes-Benz Concept A-Class, at the Shanghai auto show, reflecting the company's growing emphasis on the luxury compact segment of the China market. [China Daily]

Quite clearly, China has been a key global auto market for some years now, but perhaps this year is only the first time that the Shanghai auto show has become a genuinely international event.

This reflects a new world order in the auto industry and, most likely, the shape of things to come.

About 2,000 automakers and components manufacturers are participating in the show, with 75 new car models on display, 19 of them making their world premiere. That meant a total of 1,100 models on display.

Global media and industry observers got a look at key models being revealed in what has emerged as the world's largest auto market. And it is likely to remain so.

One company that did not fail to deliver was Mercedes-Benz, which is celebrating its 125th anniversary as the inventor of the automobile.

Its presence in Shanghai proved that its long history does not mean that it is losing its touch in innovation and design, and is still at the forefront and shaping the future of mobility.

The company talks of its passion for invention and shows it with the models on display: the much talked-about Concept A-Class, which gave visitors a glimpse of the car of the future; and the smart forspeed, with the concept of nimble, urban mobility without sacrificing its eco-friendliness.

There are the B-Class F-CELL, which proved that zero-emissions fuel cell technology is mature and reliable; and the trademark BlueDIRECT engine, with advanced direct injection technology, showing that efficiency does not equal compromising on performance.

"Our array of models on display indicates Mercedes' high regard for the Chinese market, since we brought the most important models," commented Klaus Maier, president and CEO of Mercedes-Benz (China) Ltd.

"Two years ago we debuted the new generation of our S-Class and S Hybrid, to the world, at the Shanghai auto show," said Maier.

Focus on China

"We need to make a heavy effort here, make China our top focus, since it will become Mercedes' largest market."

Mercedes-Benz more than doubled its sales in 2010, from 2009, and continued its market momentum in the first quarter of 2011, with sales of more than 43,990 passenger cars, a year-on-year increase of 86 percent.

Maier told China Daily that Mercedes could grow faster than his predicted rate of 15 to 20 percent in China's luxury car segment for the rest of the year.

Clearly its highlight at the Shanghai show was the futuristic-looking Concept A-Class, making its debut there. There was a lot of hype surrounding it, and it looks set to usher in a new compact class for Mercedes-Benz.

"In the auto industry, the ability to identify and anticipate new trends has always been a key success factor," Maier pointed out.

"And we hope, with the Concept A-Class' premiere, that Mercedes will see better development in the luxury compact segment in China in the coming years, since we've seen the success of our entry models like the B-Class and smart in the local market."

Changing market

Maier says he can still remember 2007, when he led the Mercedes China team and, "everybody here talked about the S-Class whenever Mercedes-Benz was mentioned.

"China's product structure was different from that in Europe. Our European sales were like a pyramid, with the S-Class on top, with a small portion. In China, however, the pyramid was upside down, with the flagship models accounting for around 70 percent."

But, he went on to say, he is happy to see that the situation is changing today, as sales of "young" Mercedes - smaller cars for younger people - are catching up with the traditional "Big Benz", contributing 40 percent to total sales last year.

With the appearance of the A-Class last year, Mercedes has become the first and only luxury car manufacturer to have its whole product line-up in China.

"More 'young', entry-level models give more opportunities to more Chinese to fulfill their dream of owning a Mercedes," said Maier.

"The young smart car owners can upgrade to the C-Class, E-Class and even S-Class some day, as their careers improve.

"We hope more young Chinese can join our Mercedes family under our Young Mercedes strategy," Maier explained.

He said that the improved line-up, whether for the mass market or the niche market, will meet the requirements of all kinds of people, all ages.

At the same time, Maier emphasized the dealership network as a key part of Mercedes' strategy to reinforce its position as a market leader.

"We are not only increasing our network of dealers - currently at 175 - by 30 4S (sales, spare parts, service, survey) outlets every year, but also improving customer satisfaction with the Mercedes brand."

Maier said that quality is much more important than quantity.

To get closer to the customers and meet the growing demand across the nation, Maier helped establish regional headquarters in the cities of Beijing, Shanghai and Guangzhou, last year, saying that he truly believes that one must first deeply understand the market and customers.

This means that, "The regional headquarters will implement the regional marketing, sales and branding strategies tailored for local demands."

To improve the company's customer services in East China, they opened a new parts distribution center in Yangzhou, Jiangsu province, earlier this month, at a cost of 10 million euros ($14.5 million).

"The new center is a demonstration of our long-term commitment to the local market, and a vital component of Mercedes-Benz's China success," said Maier.

He concluded by saying that Mercedes will extend its reach to more third- or fourth-tier cities, especially in the western part of the country, in the same way it has strengthened its foothold in bigger cities, and sees huge potential for growth there.