As Mercedes reveals its 2016 financial results, boss Dieter Zetsche is confident the brand will grow despite a volatile market

After more than a decade of playing catch up to BMW, Mercedes is finally eclipsing its biggest rival – last year, it sold 2.2 million vehicles, making it the world's best-selling premium car maker.

Volume isn’t everything, though – net profit was just under €8.6 billion for 2016, which is a modest growth of 1% over 2015. BMW hasn’t announced its full-year profits yet, but based on its profit of €5.4bn in the first nine months of 2016, it doesn’t seem likely it’ll match Mercedes.

So what has helped Mercedes along the way? Well, firstly, its core offering is vastly improved on recent years. Buyers should now consider a C-Class over an Audi A4 or BMW 3 Series, which certainly wasn’t the case in previous generations.

Talking at today’s announcement on 2016’s financial results, boss Dr Dieter Zetsche said SUVs make up 30% of Mercedes' sales. That’s no surprise when you look at industry trends, and that growth for Mercedes will only accelerate. It introduced the GLC Coupé late last year and we already know that a GLB model sitting between the GLA and GLC is on its way.

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Other than that, Zetsche said Smart had played a role – sales increased by 19% to a new record high of 144,400 units. “Sales were especially popular in China, rising by 70% compared with 2015,” he commented.

One jewel in Mercedes' crown is AMG, which Zetsche described as a “major sales driver”. The performance brand sold 100,000 cars in 2016, an increase of 44%. And AMG boss Tobias Moers told Autocar recently that he expects that figure to grow considerably this year, too, even if it doesn’t quite match that rate of growth. Zetsche also mentioned AMG's highly anticipated hypercar, which will use Formula 1-derived hybrid drive technology. “This offers a preview of things to come at AMG. We will define performance in the era of electric drive,” he said.

Zetsche on Trump and Brexit

However, despite Mercedes’ bright outlook, there were plenty of questions posed at today’s conference about market volatility around the world. Zetsche - like many manufacturer bosses Autocar has spoken to recently – was reluctant to comment on President Donald Trump or Brexit and their possible effects on business.

“Times certainly seem to be more volatile,” he said. “When it comes to Brexit, nobody can tell what this will mean for trade flows and trade relations. This is merely speculative at this point and that is why we don’t want to speculate. Our task is to work with the general conditions imposed by politicians and work to make it as successful as possible.”

When asked about Trump and his plans, Zetsche dodged most questions, but did say: “We prepare for things once we know the facts at hand. We, at Daimler [Mercedes’ parent company] are convinced that the entire world will profit from free trade. We have always done and will always do so, and we will try to take measures to facilitate free trade.”

EVs will cost same as petrol within a decade

Naturally, there was plenty of talk about connectivity, autonomy, shared services (or mobility) and electric plans, which Mercedes labels ‘CASE’. Despite Mercedes’ claims on being at the forefront of that, with millions of miles of autonomous testing and its Car2Go car-sharing programme – plus a new co-operation with Uber -  plenty of other car makers claim the same. Zetsche said: “We intend to occupy a leading position in all of these fields. We will continue to focus on the things that have made us so successful today. We’ve also identified several fundamental changes which are taking place in the automotive industry,” he added, referring to those CASE elements.

On the electric car front, Zetsche is confident that Mercedes' line-up of 10 forthcoming EVs will get to a 500km range, while the cost per kWh will also reduce. “It would be outrageous to predict a year where the tipping point happens and an EV will be a similar price to a combustion engine, but we believe it’s in the next decade,” he said.

So, can Mercedes hold its position as the bestselling premium manufacturer? Zetsche is confident: “We start from scratch every year so each and every year we have to prove we are highly competitive. January has been an excellent start indeed, and we firmly believe by 2020 we will still be ahead of others.”

But while volume will long be an indicator of achievement, it will be Mercedes’ ability to lead the way on everything else that will see its financial success continue for decades to come. With every other premium manufacturer doing the same, only time will tell. 

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Comments
11

3 February 2017
"After more than a decade of playing catch up to BMW, Mercedes is finally eclipsing its biggest rival" -
I think an indication less of what Mercedes is doing right than what BMW is doing wrong - years and years of styling conservatisim, both exterior and interior, is making customers tired of BMW, once an adventurous alternative to Mercedes but nolonger.

15 February 2017
I wonder how long Merc is going to retain its lead on BMW. Mercedes has a bit of a brand identity crisis in a lot of countries right now for the way that it's placed itself in the market. The Beemer is always going to be a slightly trendier and hip ride to be seen in in comparison to the stately business models that Merc has been churning out. That's my opinion in any case. To each his own!

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