Mercedes-Benz and its international fleet strategy

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‘We are driving on a multi-lane highway into the future.’ Those were the words of Dr Dieter Zetsche, chairman of the Board of Management of Daimler AG and head of Mercedes-Benz Cars at the Detroit Motor Show as he highlighted the spectrum of the brand’s driveline technologies.

His speech accompanied the unveiling of the SLS AMG E-CELL and the announcement that this 525PS (880Nm) battery-electric drive super sports car is to go into production.

‘The Mercedes-Benz SLS AMG E-CELL is the most technically advanced super sports car in the 125-year history of the automobile, and shows just how fascinating electromobility can be. Our customers will be able to order it from their Mercedes-Benz dealers from 2013 onwards,’ said Dr Zetsche.

And the carmaker also announced that it is embarking on a long-distance demonstration of the benefits of fuel cell technology. Three B-Class F-Cell models are circumnavigating the globe, across four continents and through 14 countries, starting from 29 January 2011 and taking a total of 125 days.

The date and number of days have special significance for it was on 29 January 1886 – 125 years ago – that Carl Benz applied for the patent for the Benz Patent Motor Car – the world’s first production car.

Since then the brand has expanded to running a full line-up of passenger car and light/heavy commercial vehicles, produced and sold on a global basis and including the smart and Maybach ranges.

2010 was a particularly successful year for Mercedes-Benz – passenger car sales were up 15% worldwide to 1.17 million units compared to 1.01 million in 2009. However, smart sales were down 16.6% to 97,500 units.

In December, the brand managed to increase sales by double-digit figures for the fourteenth month in a row: 108,100 units were sold, an increase of 11% compared to December 2009.

The last year has seen Mercedes increase its sales significantly in many regions such as North America, Asia/Pacific, and the BRIC countries.

In China, which is its third largest market, the carmaker set new sales records every month, rising faster than key competitors. Deliveries for full-year 2010 in China totalled 148,400 passenger cars, or more than double the number of units (+112%) sold in the prior year (70,100 units).

Mercedes-Benz also recorded very high growth rates in a number of other markets. In India, sales reached the record level of 5,800 units, an increase of 80%, and far exceeding expectations.

There were a record number of sales in Russia as well (19,700 units; +64%). In Brazil, deliveries increased by 46% to 7,500 units. Record sales were also posted in South Korea (16,500 units; +86%) and Turkey (12,300 units; +27%). In South Africa (22.300 units; +16%), Mercedes-Benz was the market leader in 2010 and was also very successful in Australia (18,900 units; +19%) and Taiwan (7,200 units; +49%).

In the US, its second largest market, the brand delivered 216,400 passenger vehicles in 2010; an increase of 14% (2009: 190,600 units) and a significant increase on its original sales target of 200,000 units.

And Mercedes remained the number one premium brand in its domestic market. Despite a 23% decline in the overall market, sales of Mercedes-Benz models in 2010 reached the same level as in 2009: 265,000 units were delivered to customers (2009: 265,500 units). Mercedes-Benz was once again by far the best-selling premium brand in Germany in 2010. Market share in the country rose considerably, to 9.6%.


Fleet

Looking ahead to 2011, it is the emerging markets that will again hold key opportunities for sales growth – including for the fleet market, according to Matthias Lührs, vice president brand sales, Mercedes-Benz Cars.

He says: ‘We see many opportunities in growth markets in which global enterprises are actively building up their fleets. This holds true, for instance, for the BRIC countries and, from the fleet perspective, also for regions such as South Africa, Australia and Central America.’

As such it will be gearing up its international fleet solution to meet needs in these markets. Mercedes already has an international sales organisation based on international Key Account Managers, who are the “One-Face-to-the-Customer” for the international, centralised purchasing departments of its major customers. There is also a national Key Account Management Team in every country that the brand is present in. At a dealer level special Fleet Centres and Fleet sales personnel take care of the requirements of the fleet managers and company car users locally. In addition the Daimler Fleet Management business offers services from leasing to fleet park management.

Commenting on the plans for developing markets such as India, China and Brazil, Mr Lührs says: ‘In these markets, both the major national companies and the local branches of international corporations are currently building up vehicle fleets to align with the national development opportunities. For this reason, we are going to introduce our established fleet solutions in these markets as the customer need arises. For example, in China we already have a Key Account Management team that is successfully acquiring and providing support for Chinese customers on a nationwide basis. Our new vehicles in the compact-vehicle segment, the first of which will be introduced in late 2011, are set to make Mercedes-Benz even more attractive as provider for fleets in these regions.’

Mercedes currently has more than 200 fleet customers with international framework agreements of which around 80 are based in Germany, almost 30 customers are in Great Britain and around 20 each in France, Italy, Spain, Switzerland and Belgium. And Mr Lührs  says that over the last year Mercedes-Benz has enjoyed significant fleet growth in Germany, Belgium, Netherlands and Austria.

The manufacturer is also focused on expanding further in the international fleet market, as Lührs goes on to explain: ‘In recent years, sales to commercial customers have acquired a growing importance for Mercedes-Benz. We are particularly focused on international fleet customers. Not only with the so-called “white fleet”, service and field service vehicles, but also “perk” or “incentive” cars, as these are of particular interest to us as a premium car manufacturer.

‘In recent years we have seen an increasing trend of international customers centralising the procurement for their fleets. Nowadays, Europe-wide and even worldwide tender requests have become the standard. This in turn naturally leads to an increase for international framework contracts with manufacturers and leasing companies. This procurement development among large fleet operators often occurs with a reduction of the number of selected manufacturers. Today this usually means only one or two premium manufacturers in the management fleet segment. We have been able to acquire many customers in this sector through international tender requests because our products have a very strong perception and we are very competitive.’

Mercedes’ C- and E-Class models have been predominant as popular fleet vehicles for many years while the A- and B-Classes are also very popular as service and sales vehicles.

For 2011, the manufacturer is offering a number of new models that will be interesting from a fleet perspective. First up is the new CLS. Mr Lührs says of the car: ‘We are again counting on a great reception in the management and motivation fleet, thanks to the overwhelmingly positive response to the presentation of the vehicle.’

Other new models for 2011 comprise the new-generation C-Class, the C-Class Coupe, the SLK and M-Class. Towards the end of the year Mercedes will present the all-new B-Class, which signals the first of four new models in the compact vehicle segment.

Part of the Mercedes-Benz fleet proposition lies in its ability as part of Daimler to offer a multi-faceted solution.

Mr Lührs explains: ‘Mercedes-Benz is particularly attractive for customers who wish to cover both: a broad spectrum of vehicles with as few manufacturers as possible. Daimler offers these customers the widest range of products on the market, from the smart to the S-Class. This applies to the different requirements in the various regions of the world. Therefore, also customers who are operating internationally find Mercedes-Benz an attractive and reliable partner, be it for small or large fleets, rental cars and increasingly in the user-chooser segment.’

And Mercedes has an extensive relationship with the leasing industry too: ‘For many years, Mercedes-Benz has worked cooperatively with all the major leasing companies on both a national and international level. For any company operating internationally with OEM partners, optimum communication and cooperation with the customers’ leasing company is essential. We ensure this is always properly managed through dedicated personnel in both headquarters and each of our major sales organisations.’

Mr Lührs adds: ‘With Daimler Financial Services we are represented in over 40 markets. This is a crucial competitive advantage as we are able to offer ideal customer oriented fleet financing. This does not only apply to the local level, but also supports customers operating on an international level. To offer integrated solutions from one source, we assembled a team covering vehicle acquisition, financial services, fleet management, spare parts supply and replacement vehicles. Bundling the entire process chain allows us quick, tailor-made responses to customers’ requests.’

And, as fleets and leasing companies start looking at how to use hybrids and electric vehicles on their fleets, Mercedes is seeing rising corporate interest in its HYBRID and E-CELL technologies.

‘The question of environmentally-friendly company cars is playing an increasingly important role, since companies are positioning themselves more and more as pioneers in terms of careful use of natural resources. In many countries there is CO2-oriented vehicle taxation, which is a strong financial incentive for individuals and companies to select greener vehicles. For cost and image benefits, many companies are introducing self-imposed CO2-based restrictions when it comes to purchasing vehicles. Mercedes-Benz already has three vehicles with an electric drive system in series production: the smart fortwo electric drive, the B-Class F-Cell with a fuel cell drive system and the A-Class E-Cell with a battery-powered drive system.

‘Today we offer our customers a choice of 85 consumption-optimised BlueEFFICIENCY models across all the model series. Our fleet customers have an important role precisely in the roll-out of new drive concepts.’

So does Mr Lührs have any advice for companies embarking on an international fleet tender? ‘Make use of your global purchasing volume and put out your calls for tender accordingly. Expect from your Preferred Partner global fleet solutions and guaranteed conditions for all countries. Many of our current customers were surprised to discover the effect that grouping their worldwide fleet requirements in the framework of the Request for Proposal has on the quality of attention and the conditions that could be negotiated. In this respect Mercedes-Benz, with its very broad-based vehicle range on offer for all requirements is an excellent partner for the International Framework Agreement.’

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