Daimler: Increased sales due to model lineup renewal and market growth in China
Driver assistance and CO2 reduction technologies depict modern image
To become the top in sales volume in the premium segment in 2020, Daimler's passenger car division, Mercedes-Benz, has been: 1) renewing its model lineup, focusing on small cars, 2) growing its market in China and other emerging countries, and 3) developing environmental technologies. With these efforts, sales volume of the passenger car division increased by 8.5% to 1.24 million units for the January to September 2014 period, which was its record high. Mercedes-Benz aims for a record high in 2014, resulting in record highs for two consecutive years.
Model lineup renewal
In 2014, Mercedes-Benz fully remodeled the C-Class and introduced a new car, the GLA-Class. Mercedes-Benz also facelifted the E-Class and CLS-Class in the same year. Since the flagship S-Class that was fully remodeled in 2013, the company began using a new design and renewed the technologies for all of its core models. The front-wheel drive (FWD) compact car's new MFA platform series started from the B-Class and includes the A-Class, CLA-Class, and GLA-Class. Sales volume of these four models has been strong and has significantly increased. To simplify the lineup, which became complex due to the growing number of models, Mercedes-Benz will apply a nomenclature that will help simplify the model names from 2015.
China strategy: to expand production capacity to 200,000 units
By 2015, Daimler, which is significantly behind its competitors-Audi and BMW, with its joint-venture partner, Beijing Automotive Industry Holding Co., Ltd.'s (BAIC), will continue to invest EUR 4 billion in China. Specifically, the automaker plans to add another local production model, expand local production capacity from 100,000 units to 200,000 units, and have two-thirds of its sales volume in China produced locally. In addition, focusing on local cities, the automaker aims to expand its sales network and start executing its strategy to catch up with Audi and BMW, which are ahead in sales volume.
Advanced-technology development for driver-assistance systems and CO2 reduction technology
It is clear that Daimler is ahead of other automakers in the development of high-level driver-assistance systems as a safety pillar for future autonomous driving. Daimler has deployed its advanced technology to a wide range of models. Furthermore, Daimler has introduced plug-in hybrid vehicles (S-Class), fuel cell vehicles (B-Class), and electric vehicles (Smart, B-Class), and has been working to reduce CO2 emissions in a wide range of technical fields, including improving fuel efficiency of internal combustion engines, and steadily achieving its goals.
|Sales target||* By 2020, become the top in sales volume in the premier segment.
* Sales volume target by 2015: Mercedes-Benz brand-1.6 million units, truck division-500,000 units, van division-400,000 units, and bus division-42,000 units
|Profit margin||* With the exception of the finance division, aim for profit margin (= Earnings Before Interest and Taxes [EBIT]/sales) of 9% in the automotive division (profit margin for the January to September 2014 period was 7.2%) and 10% in the passenger car division (profit margin for the January to September 2014 period was 7.8%).|
Four strategic areas
|Strengthening of core business||* Renew model lineups, strengthen brand, and improve efficiency. By 2020, add another 11 Mercedes-Benz brand models to the current 26 models.
* Develop advanced active/passive safety technologies for passenger cars and commercial vehicles.
|Growth in emerging markets||* Aim for growth in emerging markets with a focus on China, India, Russia, and Brazil in which future growth can be expected.|
|Environmental technology leader||* Strengthen environmental (CO2 emission reduction) technology development of internal combustion engines, hybrids, electric vehicles (EV), fuel cell vehicles (FCV), etc.|
|New mobility and service||* Due to urbanization and IT technology developments, customer needs are changing. Meet demands for convenient transportation and Internet connection at any place.|
Producing engines in U.S., assembling vehicles in U.K. and Mexico with Nissan (Dec. 2014)
Autonomous driving tests by Mercedes Benz (Nov. 2014)
Daimler: C-Class adopts "Mercedes connect me" to offer new online services (Nov. 2014)
Model lineup renewal
Renews design and technology of vehicles, ranging from flagship models to compact cars
|In two years (from 2013 to 2014), Mercedes-Benz significantly renewed its model lineups, ranging from the flagship S-Class to compact cars. In 2013, the automaker fully remodeled the S-Class after eight years. In addition to the new design, an advanced driver assistance system was installed on the vehicle to improve safety and other technologies. In 2014, Mercedes-Benz fully remodeled the C-Class and facelifted the E-Class and CLS-Class. By doing so, Mercedes-Benz unified the exterior and interior designs to a new design, sharing the design of the S-Class. In addition, the advanced system that was adopted in the S-Class, was also used in the E-Class and C-Class. With the new systems, Mercedes-Benz was able to penetrate an advanced-technology image, which flagship models have, to all of its core models.|
|All-new S-Class (Source: Daimler)||Interior of the S-Class (Source: Daimler)|
|* The C-Class was significantly upgraded and has improved its luxurious feel against the BMW 3 Series and Audi A4 Series. * Compared to its previous model, the length, width, and wheel base were increased by 95 mm, 40 mm, and 80 mm respectively. Its size is comparable to that of the E-Class's previous model. The interior and exterior designs were unified with those of the S-Class and E-Class. The texture quality of the interior is especially high in this segment and it clearly stands out among competing models. * The most advanced-driver assistance system that is equipped in the S-Class, has been equipped in the vehicle. In addition, the vehicle has also adopted this segment's first air suspension. * To improve dynamic performance and reduce fuel consumption, 50% of the body has been made from aluminum. Compared to its previous model, the vehicle significantly reduced its weight by 70 kg. As a breakthrough for intensively using aluminum material, a new method called "ImpAct", which has been receiving attention, was adopted on the vehicle body. In this method, adhesive, rivets, and screws have been used to join steel and aluminum together.|
|All-new C-Class (Source: Daimler)||Interior of the C-Class (Source: Daimler)|
Compact car enhancement
|The model that mostly contributed to the increase in Mercedes-Benz's sales volume was the FWD compact car series. The MFA platform has already been adopted by four models. The first model that adopted the platform was the B-Class in 2012. The other models that adopted the platform were the A-Class and CLA-Class, both in 2013, and the GLA-Class in 2014. In addition, the CLA Shooting Brake is scheduled to join in early-2015. This series was developed to win customer bases that were different from that of the traditional Mercedes-Benz. As a result, Mercedes-Benz was able to attract a wide range of customers, including young adults, as planned. This segment had been almost exclusively dominated by Audi and BMW when sales of the old A-Class and B-Class were sluggish. However, these series of redesigns and the introduction of new models were a hit, doubling sales volume in 2014 compared to that of 2011.|
|Exterior and interior of the CLA-Class (Source: Daimler)||Mercedes-Benz: sales volume in compact car segment|
|* The previous A-Class and B-Class adopted a unique platform. The engine was installed in a largely slanted, low position. The platform adopts a double floor. Furthermore, the rear suspension uses a uniquely shaped spherical-parabolic-spring axle. * This MFA platform has a traditional FWD layout where a general slanted engine is transversely installed, a front strut suspension, and a rear multi-link suspension. However, it is a carefully thought out, newly-developed platform. * By intensively using adhesive and laser welding for this body structure, the vehicle was able to achieve a highly rigid and lightweight body. In addition, together with the aforementioned new suspension, steering stability, ride comfort, and quietness, have significantly improved. * In 2017, Nissan will introduce the Infiniti Q30 that shares this platform. Mercedes-Benz plans to expand its platform business. (Please click here for its collaboration with Nissan.)|
|Front and rear suspension modules of MFA platform (Source: Daimler)||Body structure of MFA platform (Source: Daimler)|
Model names to change from 2015
On November 2014, Daimler announced that it was going to change its model names for the Mercedes-Benz brand models from 2015. Daimler has been increasing the number of Mercedes-Benz brand models. By 2020, it will add another 11 new models and plans to have nearly 40 models. By changing the model names, Daimler believes that it will help customers remember the model names more easily and avoid confusion. At the same time, the name of engine types that are to be included in the model names will be unified.
New model names
|1||Model names will start with one to three capital letters.|
|2||Series, focusing on five core models-"A," "B," "C," "E," and "S" will be created.|
|3||The first two letters of SUV models, excluding the "G-Class," will start with "GL."|
|4||The first two letters of four-door coupes will start with "CL."|
|5||The first two letters of roadster (rooftop) models will start with "SL."|
|6||For the third letter, a letter related to core models will be used.|
Engine type name
|" c "||"compressed natural gas" (currently "Natural Gas Drive"); e.g., "B 200 c"|
|" d "||"diesel" (currently "BlueTEC" and "CDI"); e.g., "E 350 d" and "GLA 200 d"|
|" e "||"electric" (currently "PLUG-IN HYBRID", "BlueTEC PLUG-IN HYBRID", and "Electric Drive"); e.g., "S 500 e" and "B 250 e"|
|" f "||"fuel cell" (currently "F-CELL"); e.g., "B 200 f"|
|" h "||"hybrid" (currently "HYBRID" and "BlueTEC HYBRID"); e.g., "S 400 h" and "E 300 h"|
|New nomenclature for Mercedes-Benz brand models (Click for a larger image, Source: Daimler)||New nomenclature for drive systems (Click for a larger image, Source: Daimler)|
Mercedes-Benz's China strategy and three premium brands' sales volume
Three premium brands' global sales volume When comparing the global sales volume of the three premium brands-Mercedes-Benz, BMW, and Audi-fierce competition among them can be seen. Sales volume of all the three brands fell during the time of the Lehman Brothers bankruptcy; however, their sales volume have continued to steadily grow from 2010 and beyond. According to the cumulative sales up to November 2014 and MarkLines' forecast for December sales, the full-year sales volume will certainly exceed that of the previous year. In global unit sales, the three brands were competing; however, looking at the breakdown by region, circumstances were different.
Three premium brands' sales in Western Europe Audi's sales volume in Western Europe increased in 2011 and 2012. Mercedes-Benz's sales volume increased in 2013 and 2014. Sales volume of others remained almost flat. Because Mercedes-Benz introduced four FF compact car models, such as the A-Class, it resulted in a sales volume increase, which appeared in 2013 and 2014.
Premium brands' sales in the U.S. Mercedes and BMW have been competing to become the top in U.S. sales volume. Lexus used to be first place in U.S. sales volume; however, due to the Toyota recall's negative image, the Lexus was forced to switch places with Mercedes and BMW from 2011 and beyond. Audi has been steadily increasing its sales volume; however, its brand image in the U.S. has not yet improved much as it did in other regions.
Three premium brands' sales in China The Chinese premium market has continued to expand. Audi and BMW have significantly increased its sales volume in China. Because the price difference between locally built models and imported vehicles is huge in China, local production is the key to growth. Mercedes-Benz is planning to locally produce 200,000 vehicles in 2015.
Mercedes-Benz's China strategy
|EUR 4 billion investment||Invest EUR 4 billion in its joint venture with BAIC by 2015 (announced in 2013). In 2014, invested EUR 1 billion to expand production capacity of vehicles and engines. Plans to expand the passenger car production capacity from the current 10 million units to more than 20 million units in 2015.|
|Addition of local production model||Has been producing the GLK-Class, C-Class (long-wheel version), and E-Class (long-wheel version) but plans to add the GLA-Class in 2015.|
|Expansion of local production capacity||Half of sales volume in China were local production models in 2013; however, plans to increase local production models to approximately two-thirds.|
|Expansion of sales network||In 2013, there were 337 dealers in China. Increase the number of dealers to approximately 100 in 2014, focusing on regional cities.|
|EV joint development with BYD||From September 2014, Daimler's and Chinese BYD Auto Co., Ltd.'s (BYD) joint venture, Shenzhen BYD Daimler New Technology Co., Ltd., started production of its first series of EV models "Denza". The Denza will be produced on a production line that was built specifically for it at BYD's Shenzhen plant. For the time being, the vehicle will be sold in a few cities, such as Shanghai, Beijing, and Shenzhen.|
Advanced technology strategies for driver assistance systems and CO2 reduction
Driver assistance systems for future autonomous driving
Advanced technology for CO2 reduction
Daimler has been also actively developing EVs, FCVs, and plug-in hybrid electric vehicles (PHEVs). Daimler has developed CO2 reduction technologies in a wide range of areas, including diesel engines and downsized-turbocharged engines.
|Limited lease sales of the B-Class FCV began in 2010. As with the EVs, demonstration tests were conducted worldwide. Two hundred vehicles were delivered by the end of 2010. Seventy vehicles were delivered just to California, the U.S. by 2012. Driving performance is equivalent to that of a 2.0L gasoline engine; maximum speed is 170 km/h (106 mph). Tesla Motors' permanent magnet synchronous motor (maximum output: 132 kW/180 hp, maximum torque: 340 Nm/251lb-ft /34.7kgm) and Panasonic's lithium-ion battery (capacity: 11.5 kWh) are equipped on the floor of the vehicle.||(Source: Daimler)|
Daimler Group's consolidated results
Daimler's total sales volume for the January to September 2014 period increased by 7.6% year-over-year (y/y) to 1.83 million units. Of the aforementioned sales volume, global sales volume of the passenger car division, Mercedes-Benz Cars, for the period increased by 8.5% to 1.24 million units, which was its record high. Looking by region, sales volume in China significantly increased by 25.3% y/y to 215,000 units.
On the other hand, sales volume in Western Europe increased by 0.4% y/y to 484,000 units. While sales volume in Germany hovered at 199,000 units, down by 5.8%, sales in the U.K. were strong and offset the sales volume in Germany. Sales volume in the U.S. increased by 8.1% y/y to 243,000 units. It exceeded the sales volume in Germany, Daimler's home country, and has become its largest market.
Strong global sales of Daimler's A-, B-, CLA-, and GLA-Class compact cars and the introduction of the new flagship S-Class have contributed to the increase in sales volume.
Daimler expects Mercedes-Benz's sales volume will set another record high in 2014.
Daimler's sales for the January to September 2014 period increased by 9.6% y/y to EUR 94.1 billion, and EBIT increased by 2.7% to EUR 8.61 billion. EBIT of the passenger car and commercial vehicle divisions significantly increased by 54.6% y/y and 33.8% y/y respectively. However, profit of approximately EUR 3.2 billion was recorded from the sales of shares in 2013; therefore, consolidated EBIT hovered at a 2.7% increase.
Sales in 2014 significantly exceeded that of the previous year. It is expected that EBIT, with the exception of special factors, will also be significantly higher.
Business forecast in 2014
|Sales volume||* Expects that the group's total sales in 2014 will significantly exceed that of the previous year. * Sales volume of the passenger car division will significantly exceed that of the previous year. Expects that sales volume in 2014 will set another record high. The new S-Class and C-Class sedans and compact cars, such as the GLA-Class, have contributed to the increase in sales volume. * As for the sales volume of the commercial vehicle divisions, Daimler expects that, although sales volume of the van division will grow, sales volume of the truck division will slightly increase and sales volume of the bus division will slightly decrease.|
|Sales/profit||* Expects that sales in 2014 will significantly exceed that of the previous year. The North American and Chinese markets are contributing to the sales. As for EBIT (excluding special factors), Daimler expects that the passenger car and truck divisions will contribute, significantly increasing it.|
|Investment/research and development (R&D)||* Plans to invest EUR 5 billion in 2014. * Plans to invest EUR 5.5 billion on R&D of the next-generation E-Class, M-Class and a new small car in 2014.|
Daimler's consolidated business results (in millions of EUR)
|2008||2009||2010||2011||2012||2013||Jan.-Sep. 2013||Jan.-Sep. 2014|
|Sales (1,000units)||Passenger car||1,273||1,094||1,277||1,381||1,452||1,566||1,142||1,239|
|Total sales||Passenger car||47,772||41,318||53,426||57,410||61,660||64,307||46,955||53,452|
|Source：Daimler Annual Report|
|Note 1.||Passenger car is Mercedes-Benz Cars division. Commercial car include Daimler Trucks, Mercedes-Benz Vans, Daimler Buses. Production include passenger car and commercial car.|
|2.||Total of Total sales and EBIT (Earnings Before Interest and Taxes) include Financial Services division.|
|3.||The numbers in brackets "( )" represent negative values.|
|4.||Consolidated EBIT and net profit in 2013 includes revaluation and sales gains of EUR 3.22 billion from European Aeronautic Defence and Space Company shares. In addition, financial results for the January to September 2014 period includes sales gain of EUR 1 billion from Rolls-Royce Power Systems Holding shares and revaluation gain of EUR 718 million from Tesla shares.|
Mercedes-Benz Cars unit sales breakdown by region
|2008||2009||2010||2011||2012||2013||Jan.-Sep. 2013||Jan.-Sep. 2014|
Source：Daimler Annual Report
Sales Forecast by LMC Automotive: Daimler's light vehicle global sales will be 2.3 million in 2017
|(LMC Automotive, Quarter 3, 2014)|
According to LMC Automotive's forecast in 2014 Q3, Daimler light vehicle sales will increase to 2.34 million units in 2017, up 30% from 2013. Over the next few years, the group looks well placed to reinforce market share as more products hit the market. The appetite for Premium cars in Europe continues to grow, and with the further proliferation of its product portfolio, the group is well placed to be at the forefront of the increased premium segment penetration.
That said, the markets that are expected to recover strongly (from weak bases) in the mid-term are traditional non-premium markets, such an Italy and Spain. This may limit the group's potential to add market share.
The largest growth market is China. Increasing wealth as well as consumer's trading up will provide long‐term market potential for premium segments. Daimler increase to 511 thousand unit in 2017, it is double score from 2013. The sales share of Chine market in global Daimler's total sales will increase to 21.8% in 2017 from 13.8% in 2013. Thus, for Daimler Chinese market becomes bigger market than the US market and the German market.
Daimler light vehicle sales forecast (units)
|Daimler Group Total||1,601,358||1,651,693||1,804,092||1,863,527||2,115,179||2,253,316||2,343,251|
|South Africa total||29,014||25,394||26,628||33,684||51,701||55,037||58,280|
|Czech Republic total||3,987||4,274||4,222||4,598||4,009||4,470||5,129|
|Source: LMC Automotive "Global Automotive Sales Forecast" (Q3 2014)|
|(Note) 1.||Data indicate figures of only small-size vehicles, including passenger cars and light commercial vehicles with a gross vehicle weight of under 6 tons.|
|2.||All rights reserved. Reproduction of any data will require permission of LMC Automotive.|
|3.||For more detailed information or inquiries of forecast data, please contact LMC Automotive.|
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