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Mercedes-Benz holds its own as one of the world's most prestigious luxury brands. Although it is rivalled in the luxury automobile sector by BMW, Audi, Lexus and others, the Mercedes badge arguably carries more status than any of its competitors. Not only does ownership imply wealth, but also a degree of superior taste reflected by the brand's understated and long-established glamour. However the badge became a little tarnished in 2004 as quality control slipped and competition increased dramatically. Parent company Daimler launched a major program to re-establish the Mercedes credentials in 2005, and since the demerger of troubled Chrysler a year later has given the Mercedes brand its complete attention. Strong growth since 2010 put Mercedes-Benz back in the #1 position among luxury car brands in 2016, for the first time for a decade.
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Interbrand's Best Global Brands survey ranked Mercedes-Benz as the world's #9 brand in 2016, and the #2 car after Toyota, with an estimated brand value of $43.5bn, marginally ahead of BMW. Millward Brown's Brandz survey ranked Mercedes-Benz at #39 (behind both Toyota and BMW), with an estimated value of $22.7bn. Both surveys use different measurement criteria.
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Mercedes' halo wobbled more than a little in 2004 as over-confidence and problems elsewhere in the parent group caused management to pay insufficient attention to a slide in quality, a sharp upsurge in competition and an ageing model line-up. That inattention was dealt with effectively by new group CEO Dieter Zetsche, with a host of redesigns and brand new cars unveiled since 2005. Mercedes delivered a stronger performance for 2005 as a whole, but was overtaken in global sales for the first time by BMW. In 2010, the group resurrected as its brand slogan a phrase first coined by founder Gottlieb Daimler: "The Best Or Nothing". It finally fulfilled that call-to-arms in 2016, ousting BMW from the top spot in the luxury car market.
Mercedes is the lead brand within the Mercedes Car Group, which also houses the Smart small car brand. Mercedes has always been renowned for its classic design and style as well as performance and quality. This is perhaps one of the only auto marques that could conceivably launch its own successful range of fragrances or leather goods. As the embodiment of luxury desired by the masses, it is also one of the world's most referenced brands. In the chart of brands compiled for several years by marketing consultancy Agenda Inc, Mercedes regularly featured as the single most namechecked brand in top-selling music tracks in the US. In 2003 and 2005, for example, it was mentioned more than 100 times in the year's Top 100 songs, or at least once every single week of the year. What does it say about the brand that it held this position despite the fact Lexus - which didn't even make the Top 10 - sells more cars in the US?
This desirability is reflected in Mercedes' sales figures. One of the most remarkable developments in the industry since 2000 has been the steady growth in popularity of more luxurious models. Despite being one of the world's most expensive mainstream car brands, Mercedes-Benz increased sales from around 600,000 vehicles in the mid-1990s to a peak of a little under 1.2m units in 2002. However, unit sales slipped in both of the following two years. At the same time, quality control also dropped dramatically, with the number of breakdowns for the Mercedes brand increasing sharply. After years as one of the best-performing brands in the JD Power initial quality survey, the industry benchmark, Mercedes plunged to 14th place in 2003. In early 2005, the group vowed to improve quality control, but almost immediately issued a recall of more than 1.3m cars, its biggest ever call-in, to fix electronics problems.
Results for 2006 and 2007 indicated that Mercedes had largely overcome these problems, although it was not then able to regain its #1 position in the sector from arch-rival BMW. The latter overtook Mercedes in global sales for the first time in seven years for the first half of 2004, enhanced by its rapid diversification into other car models such as SUVs and small cars. Porsche too experienced enormous success with its own SUV. As a result, Mercedes was to some extent forced into catch-up, spending almost half of the group's entire research and development budget in 2004 on new models, including brand new B-class and R-class sports tourers, and a complete overhaul for the A-series and M-class. Two completely new models were introduced in 2008, the GLK sport utility vehicle and CLC sports coupe. The group has also been developing its own F-Cell hybrid hydrogen fuel system, but this is still not ready for full production. In the mean time it marked its environmental credentials with greatly improved diesel technology, marketed under the BlueEfficiency banner, which promises higher and cleaner mileage per tank. "Blue is the new green" claims the accompanying marketing.
The Mercedes-Benz marque reached a new high of 1,180,100 units in 2007, finally exceeding 2002's peak. However the very challenging conditions which plagued the industry over the following two years took the shine off this performance, pushing volume sales back below the 1m level for 2009. There has been steady growth since then. The prior record was finally beaten in 2011, and further rises cumulated in a total of 2,083,888 units for 2016, the company's sixth consecutive year of record sales. Crucially, that historic high also pushed Mercedes-Benz above BMW in global registrations for the first time since 2005. Another rise in 2017 took total unit sales to 2,289,344 cars.
Stripped of the distractions provided by Chrysler, Daimler has focussed its attention on strengthening and broadening the appeal of Mercedes. The model range has jumped in recent years from just five basic models to as many as 15, although they remain grouped in five price bands. Positioned at the highest end of the market are the S-Class full-size luxury sedans and CL roadsters. For several years, this group also included the ultra-luxury Maybach model, but its initial performance proved disappointing. The group acquired the Maybach marque in 1960, and used it for a small number of custom-built models. The brand was relaunched in 2002 to compete with BMW's Rolls-Royce and VW's Bentley, with cars priced upwards of $375,000 each. The group had hoped to find around 1,000 buyers a year, but in fact the success rate was well below that. In 2011, the group sold only 200 units. As a result, Daimler discontinued the brand from 2013, and instead launched two additional top-of-the-range Mercedes models. The Maybach name was reintroduced in 2015 for a top-of-the-range S-model under the Mercedes-Maybach banner.
The brand's top-selling traditional passenger car is the C-class range, now available in saloon, estate and sports coupe models. First launched in 1982 (as the Mercedes 190), the C-class was the company's first comparatively compact model and was the platform for the brand's meteoric growth. Sales jumped in 2007 as a result of a further redesign of the sedan model, and continued to rise over the next couple of years before falling back in 2009. Sales have risen steadily since 2010, hitting 480.5k units in 2016. However, that model has been eclipsed since 2014 by the company's SUV range. Mercedes entered this segment with the M-class, and has added several additional models including the R-class sports tourer and GLK. The group still produces a small number of the G-Class 4x4, one of the original sports utility vehicles, first introduced in the late 1970s. Combined SUV sales have risen steadily, reaching record highs of over 706k in 2016, up by moire than a third on the year before. Another comparatively recent development was the move into the compact and sub-compact segments with the affordable A-class town car, relaunched very successfully with new designs in 2012, and B-class sports tourer, introduced in 2005. Those two models sold a combined total of 438.6k units in 2016. Mercedes-AMG, in which the group has a 51% stake, makes high-performance versions of standard Mercedes models.
Germany remains a key market for Mercedes, although sales were lacklustre between 2007 and 2014, bouncing up and down as a result of weak economic conditions. They gathered momentum after then though, rising to almost 304k units for 2017. Mercedes remains the #2 car overall brand in that country (behind VW), and the top-selling premium brand. The rest of Europe contributed an additional 655k units, helped by strong sales in Spain, France and the UK.
In the US, sales rose by double-digit percentages between 2009 and 2013, before reaching a new high of 350.5k units in 2015. For 2016 and 2017, there were slight declines to 337k units for the latter year. Nevertheless, that growth established the US as the brand's top-selling market for the first time in 2014, overtaking Germany. In 2013, Mercedes regained the #1 position in the US luxury market ahead of both Lexus and BMW for the first time since 1998.
However, China has been the brand's fastest growing market since 2007. It overtook Germany for the first time in 2014, and then the US in 2015 to become the overall #1. Another 26% leap took sales to 588k units in 2017. The group operates two joint ventures, one with Chinese company BAIC to manufacture selected cars locally and another with a different partner to import other models. Some of that momentum has shifted to Japan where sales jumped 25% in 2012 and by 31% in 2013.
Combined revenues for the Mercedes-Benz cars group rose 6% in 2017 to a new high of €94.7bn, or 58% of Daimler's group total. Daimler also makes a wide variety of commercial vehicles under the Mercedes brand. (See Daimler profile for more).
The group's light commercial vans and buses businesses are now held in separate units. It sold a record 401,000 Mercedes-branded vans in 2017, with a combined value of €13.2bn. The best-selling van models are the Sprinter and Vito/Viano. The Citan delivery van launched in 2012 was one of the first fruits of a strategic alliance with competitor Renault.
To attract a younger, hipper audience, especially in the US, Mercedes has become a high-profile sponsor of fashion events (including Fashion Weeks in New York and London), as well as music events and activities. Mercedes-Benz Mixed Tape music magazine, a web-based video and MP3 download service, claims to be one of the world's most successful legal download sites, with more than 2.5m registered users. Mercedes-Benz USA ranked 4th among US auto manufacturers for sponsorship spending in 2014, with an estimated spend of $55m. In 2015, the brand sponsored Rock in Rio USA, a sister event to Brazil's biggest music festival. In sport, Mercedes-Benz has for many years been heavily involved in Formula 1 racing. It was the co-owner and sponsor for much of that time of the McLaren team. In 2009, however, Mercedes swapped teams, acquiring instead the largest shareholding in Brawn GP, the new incarnation of what was previously the Honda team. That team became Mercedes Grand Prix. The group will continue to supply engines to Vodafone McLaren, but plans to sell its shareholding. The group also sponsors the home of German football champions Stuttgart, which changed its name to the Mercedes-Benz Arena in 2009. It supports a number of golfing tournaments worldwide including The Masters, the PGA Championship, the Ryder Cup and the Open Championship.
Last full revision 14th November 2017
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