Friday, October 26, 2012

Mercedes: heading for a struggle in China - Shaun Rein

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Shaun Rein
Until last year Mercedes sold its sedans like hot buns on the China market. But the preference for SUV's and higher-profile competition makes the future less certain for the German car market, writes business analyst Shaun Rein in Business Week.

Shaun Rein:
Demand is so strong for high-end SUVs that the Porsche Cayenne has a six-month waiting list and is barely discounted, if at all. Mercedes rolled out the GLK SUV at the 2008 Beijing auto show, but wealthy Chinese considered it low-end at a mere $50,000. The M-Class, an older luxury SUV, is boxy and plain and lacks the handling ability of its rivals. Mercedes needs to roll-out a high-end, more muscular SUV. 
Finally, Mercedes’s dealer network suffers from the worst satisfaction scores achieved against BMW, Audi (NSU:GR), Maserati, and Porsche, based on customer satisfaction surveys and mystery shopping that we completed. Common complaints have been that Mercedes salesmen were “unhelpful”, “unknowledgable,” and “unprepared” to deal with customer questions. 
Mercedes can certainly rebound in China. It still has strong brand resonance and in the next quarter will likely benefit from Chinese boycotts of such Japanese brands asLexus (TM) and Infiniti (7201:JP). If Mercedes can release new models at different price points—yet maintain a cohesive brand positioning—it has a chance to return to the top ranks of luxury automakers in the world’s biggest auto market.
More in Business Week. Shaun Rein is a speaker at the China Speakers Bureau. Do you need him for your meeting or conference? Do get in touch or fill in our speakers' request form.
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