Mercedes Benz ups the ante

SHARE   |   Monday, 21 March 2016   |   By Kabelo Adamson
MBSA CEO and Executive Director, Arno van der Merwe MBSA CEO and Executive Director, Arno van der Merwe

Mercedes Benz plans to make 2016 the year of “Open Top Driving” as the company seeks to take open top driving to a new a level from June this year, the company said on Thursday at the announcement of 2015 Annual Business Results at its manufacturing facility in East London, South Africa. Mercedes Benz South Africa (MBSA) – a 100 percent owned subsidiary of Stuttgart headquartered Daimler AG - says it will take the concept to a new level with its legendary Mercedes Benz SL, with the SLK set to be re-launched in June under the new name – the SLC. The company has lined up an exciting series of new models for 2016 which includes C-Coupe to be unveiled in April this year as well as the 10th generation E-Class expected in June this year as well. MBSA says it is aiming for 41 models by the end of the decade by 2020. 

MBSA which under its portfolio and besides manufacturing premium luxury passenger cars, consists of Daimler Trucks and Buses, Mercedes Benz Vans and Mercedes Benz Financial Services has held its pole position in the premium luxury segment, with total sales of 24 608 cars. That is 3000 units ahead of its nearest competitor. The group which has a diverse portfolio and recently announced the opening of its Regional Centre Southern Africa for commercial vehicles,  manufactures cars for all markets including left hand driven cars and exports to more than 80 markets across the world, including  the USA where exportation was resumed in October 2015. Despite a challenging year for the MBSA which is characterized by unfavorable economic conditions which includes the irregularity of the currency of the market it operates in, MBSA CEO and Executive Director Manufacturing, Arno van der Merwe is happy with the group performance and says they have achieved record production levels in line with the foundation laid in 2014.

He said they witnessed a record export numbers of the C-Class and achieved robust sales in a declining market and further cemented leadership in the commercial vehicle segment. “The economic climate is changing, but we remain confident that we have built a steady basis from which to face all headwinds with resilience and further success,” Van der Merwe said. MBSA started production of the new generation C-Class in its East London plant and is exported to various markets with a total investment of more than R5 billion having been made between the years 2011 and 2015. Due to the introduction of the new generation C-Class, the company said it did not manufacture any passenger cars in the first six months of that year and hence the increase in revenue when full year of production from 2015 is compared to the revenue generated the year before. The 2015 revenue generated totaled to R65.8 billion – an increase of 45 percent in the previous. This is believed to be in large part due to the increase in production volumes out of the East London plant and the concurrent increase in export revenue generated from the facility.

Income has almost doubled in four years period, with R33.26 billion in form of revenue generated in 2012. MBSA Earnings Before Interest and Tax (EBIT) from ongoing business has increased from the previous year’s level and improved by 52 percent to end at R4.67 billion. As a way to ensure maximum productivity and efficiency at the East London plant, the group says it has made a further investment of R498 million in 2015 towards the plant. In terms of divisional operation, Mercedes Benz Cars remained in the number one market position in the luxury market. The company says it takes into account tougher economic climate to determine its pricing which it says remains to be market-related and will offer customers value for money solutions to encourage their purchasing decisions during this price sensitive period. On the other hand, Daimler Trucks and Buses (DT&B) which produces commercial vehicles has also remained the market leader in in the industry. The division has brands such as Mercedes Benz Trucks, Freightliner, Western Star, Mercedes Benz Buses and FUSO Trucks.

Daimler Trucks and Buses Southern Africa Executive Director, Kobus van Zyl said the division remained resilient in 2015 despite the depreciating Rand. The DT&B segment sold 5 300 units in 2015 and 95 percent of Mercedes Benz trucks are sold in Southern Africa and van Zyl says the portfolio will be doubled in the next five years. The company which is the first to come up with automated trucks says it will continue on its innovation track to offer modernized trucks. Van Zyl said with safety as one of their key cornerstones, they have and will continue to invest in that aspect and have developed a lane assist for their trucks which will ring an alert in case the driver falls asleep during the drive. The whole idea is to minimize accidents according to van Zyl. He said they also track their vehicles wherever they are which is not meant to infringe on the owners of the vehicles but to ensure safety. Mercedes Benz Vans division has also performed showing signs of improvement, increasing its market share by 1.3 percentage points for the large van market and 3.8 percentage points for the mid-size market. 

Two new products released into the market, the V-Class and the Vito are said to have proved to be successful. The Mercedes Benz Financial Services (MBFS) Portfolio is also said to be showing solid performance following acquisitions that surpassed all records securing 7 percent growth in 2015 and exceeding the R10 billion. The company said it was able to acquire good quality business even after the implementation of more stringent legislative lending criteria and despite the Monetary Policy Committee’s decision to raise the lending rates twice in 2015. The division partly deals with financing of vehicles, with four out of 10 Mercedes Benz Passenger Cars and Mercedes Benz Trucks and two out of 10 Mercedes Benz Vans and Mercedes Benz financed through MBFS.