Author: Chang Yan
In terms of long-term perspective, as the inventor of automobiles, Mercedes-Benz has spent unmatched time researching and contemplating the automobile industry.
In terms of vision, recently every heavyweight Mercedes-Benz concept car has been given the name “VISION,” inspiring the future.
In terms of long-term vision, you have to watch Mercedes-Benz’s super long press conference tonight.
Mercedes-Benz has never lacked important transitional moments in history, such as when in 1899, Emile Jellinek wanted to participate in the “Nice Trip” race in France under the name of Mercedes-Benz, which he represented. Today’s discussion held just 30 kilometers away from the place where Mercedes-Benz was named, could potentially be mentioned in the future with the same significance.
In terms of the theme of this event, it may be difficult to comprehend from the Chinese translation, but the English original text “The Economics of Desire” makes it easy to understand the underlying meaning.
On one hand, this is closely related to Mercedes-Benz’s most direct market strategy.
On the other hand, this reflects Mercedes-Benz’s updated understanding of the spiritual value beyond the physical product, of luxury cars and even luxury brands.
While other brands are still considering how to produce “value” on the car’s body, Mercedes-Benz has already been expressing its own values.
Focusing on luxury
This week, I have been interviewed by several other media outlets, and their themes are all very consistent: Is the automotive industry facing difficulties now?
The answer is yes, except for this year’s special circumstances, the industry’s transformation, chip scarcity, and new requirements for electrification are all challenging.
But the more challenging it is, the more we must leverage our core strengths — so even though it’s tough, I have to write my article honestly here before noon after watching the press conference at 9:00.
This principle is the core idea expressed by Ola Källenius, Chairman of the Board of Management of Daimler AG, at today’s event.# Mercedes-Benz’s Focus on Luxurious Segments
Luxury has always been a core of our brand and now, it has become the centerpiece of our corporate strategy. We are strengthening our business model and product matrix to maximize Mercedes-Benz’s potential, even in challenging environments. Our ultimate goal remains to create the most desirable car in the world.
Therefore, Mercedes-Benz’s strategy for its product lineup is to focus on luxury. Even if you can recite all the different car models arranged in alphabetical order by Mercedes-Benz, please reset and update your understanding of their car lineup.
In the future, Mercedes-Benz will focus on three main product lineups: “High-end Luxury,” “Core Luxury,” and “Next Generation Luxury.”
In short, the “High-end Luxury” products are those that inspire respect and desire, including:
- All Mercedes-AMG and Mercedes-Maybach brand models;
- High-end models from Mercedes-EQ including the EQS and EQS Pure Electric SUV;
- Mercedes-Benz S-Class sedans, G-Class vehicles, and full-size luxurious GLS SUVs;
- Limited edition models and exclusive cross-border models.
Higher-grade limited edition and exclusive cross-border models are becoming Mercedes-Benz’s new interest. Just as many people turned their hobbies into work during home isolation, Mercedes-Benz has turned its occasional inspiration into a series. The “Mythos Series” is a new project aiming to create exclusive collectible cars.
All the cars inside this series will be limited edition, catering to loyal fans and collectors with deep pockets.
The following sentence is from Mercedes-Benz’s official statement, and I feel too lazy to come up with a better one, so here it is: Every car model in the “Mythos Series” project aims to achieve greatness and win a place in the hall of fame of the three-pointed star emblem’s historic cars.
Interestingly enough, during the simultaneous interpretation at the press conference, the translator mistakenly interpreted the “Mythos Series” as the “Mythical Series.” I reported this to Mr. An, the owner of an EQS from our company, and he replied, “I want to buy the Erlang Shen (Chinese Mythical God) Edition.”
You can never predict what an esteemed Mercedes-Benz owner might say as a wish, just like how it is hard to predict what kind of inspirational works they can create with such a vast heritage of symbols.
“Core luxury” just like me, represents the backbone of strength, carrying the highest sales for the brand. Translated into English, it means you are the hope of the company and must work hard for everyone’s livelihood.
Currently, within the Mercedes-Benz family, which includes the C-Class and E-Class families and their derivative models, Mercedes-Benz is set to release the EVA2 platform for large and pure electric vehicle models (including the new EQE and new EQE pure electric SUV). This means that we will have more and more articles to write in the next few years.
Mercedes-Benz’s preference for electrification and respect for the Chinese market have come together in a new model based on the EVA2 platform and specifically designed for the Chinese market. This new model will also belong to the “core luxury” category.
“New generation luxury” does not mean electrification, but rather represents the most youthful and entry-level models within the Mercedes-Benz family. In the “new generation luxury” product matrix, Mercedes-Benz has reduced 7 models to 4, and technology will become the common label for these models.
In summary, there are fewer entry-level models and more high-end models, providing a more focused driving experience for those who are down-to-earth and more dreams for those who gaze at the stars. All of them have the appearance of the three-pointed star.
Focus on Profit
In the previous chapter, the theme of Mercedes-Benz’s press conference was “Think and act like a luxury company”, and in the second chapter, the goal is even easier to understand, “Focus on profitable growth.”
Koert Lindner said, “We are not moving towards the market, but the market is moving towards us.”
At the press conference, Koert Lindner stated that Mercedes-Benz’s pursuit is never to become the largest automotive brand in terms of sales volume, but to create value for users and investors as an automotive brand.
Pursuing sales volume blindly may result in a continuous decrease in average price, which will also have an impact on the brand’s value.
The upgrade strategy is to increase the average value of the vehicle while increasing sales volume simultaneously.
The original text of this financial goal is: “Regardless of the economic situation, we are committed to reducing fixed costs, optimizing pricing measures, and focusing on stronger profitability.”
“The company is committed to further improving its structural profitability and striving to achieve a profit margin target of about 14% by the mid-2020s under favorable market conditions. The company is committed to achieving a profit margin of about 8% under extremely difficult market conditions, about 10% under more difficult market conditions, and about 12% under normal market conditions.”
Of course, this is not simply about selling cars through price adjustments. It is the glory attached to the brand that will be reflected in Mercedes-Benz’s new products and polished through user experience.
It can be said that Mercedes-Benz is trying to define the new luxury.
The new opportunity of electrification, the humanistic presentation of new technology, the heritage of classic design, and the display of digital luxury, physical presentation, and digital concept are all part of the new luxury.
I think this alone is enough to write a new article, but I don’t have much time left today.
So let’s move on, as those who are still willing to read on after the previous section are surely not hindered by car prices in their pursuit of the Mercedes-Benz dream.
Focusing on Services
Therefore, everyone should expect to receive better services.
This may be the most influential measure. With changes in the model matrix and market sales demand, Mercedes-Benz will provide updated and innovative sales methods and experiences.
This is summarized as the “luxury customer experience that is fully channelled, all sensory, and seamlessly connected.”
When introducing the design logic of this system, Mercedes-Benz talked about the hope to comprehensively manage consumer relationships, understand consumer purposes, and respond to consumer needs through online and offline means.
Therefore, direct operation has become the necessary way to better control the whole process. Mercedes-Benz talked about the Dubai AMG City Brand Centre, which officially opened in December 2021, the upcoming LUXGEN·Maybach Brand Centre in Shanghai in a few months, and three different style and vehicle preference direct stores, including the G-Class Experience Center opened in Austria, and welcomed everyone to visit.
Mercedes-Benz also welcomes us to visit with them.It is estimated that by 2025, over 80% of Mercedes-Benz’s sales in the European market will come from direct sales.
At the same time, inspired by many new platforms, the logic of reducing model configurations and improving production efficiency will also be applied in the sales process of Mercedes-Benz, and users can freely choose from various vehicle configuration packages based on personal preferences and local market demands.
“This move will simplify and speed up the online configuration process, bring customers faster and richer optional packages, and can also significantly reduce the operational complexity of the company. At that time, basic models can also be equipped with higher-level configurations, and this kind of package selection scheme is expected to help improve vehicle residual value.”
If Mercedes-Benz’s strategy release during the electrification transformation reflects the brand’s response to new technologies, then this press conference is undoubtedly the answer to the new challenges faced by the brand.
It is said that the automotive industry is facing unprecedented major changes, and Mercedes-Benz has also found a new path in the era of a historical restart.
We rarely question Mercedes-Benz’s path.
Just like I rarely question whether I can finish writing such a long article before 12 o’clock.
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.