Mercedes Benz details new brand strategy
The German car brand Mercedes Benz has just announced a new strategic course that will focus on profitable growth in the luxury vehicle segment and target leadership in electric drives and car software.
"We intend to build the most sought-after cars in the world. It is about using our strengths as a luxury brand to increase economic value and improve the mix and positioning of our product portfolio. We will use the full potential of our unique sub-brands - AMG, Maybach, G and EQ ", shares Ola Källenius, Chairman of the Board of Management of Daimler AG and Mercedes Benz AG.
Regarding the new strategy announced by Mercedes Benz, Källenius commented: "With this new strategy we announce our clear commitment to the full electrification of our product portfolio and our determination to ensure that the business is completely climate-neutral according to our Ambition 2039 target. "
Mercedes Benz's new strategy is a comprehensive program designed to advance the company both technologically and financially. It has six pillars:
1. Think and act like a luxury brand
Mercedes Benz has always been a luxury brand. Going forward, the brand is focused on being more connected to its luxury roots, making it an integral part of all products in their range, a part of customer interaction as well as digital technologies. The brand will redesign its entire playbook, including product portfolio, brand communications and distribution network, to bring its customers the true luxury experience: a luxury experience that the brand claims will be "electric, software-driven" and sustainable. "
2. Focus on profitable growth
The brand will also focus on taking steps to improve and recalibrate its market strategy. Part of this will focus on optimizing the balance between volume, price and channel mix to ensure improved contribution margins from Mercedes Benz's current and future portfolio. The brand will also focus its resources and capital on the most profitable parts of the market and the segments in which it competes to ensure structurally higher profitability.
3. Expand the customer base with growing sub-brands
According to Interbrand, Mercedes Benz is currently the world's most valuable luxury car brand, and the brand wants it to stay that way. The new strategy of Mercedes Benz also aims to improve the sub-brands AMG, Maybach, G and EQ, with clear and targeted plans to fully exploit their potential.
Mercedes Benz's AMG brand is poised to take the next level with its high-performance electrification plans set to begin in 2021. Maybach, a luxury auto brand that was acquired by Mercedes Benz in the 1960s, will focus on global opportunities to double its size and go electric. With the EQ brand, Mercedes Benz will appeal to a new audience with advanced, high-tech products based on special electrical architectures.
4. Embrace Customers and Increase Recurring Sales
In addition to increasing sales performance and renewing the range, Mercedes Benz is also committed to lifelong relationships with its customers. The brand aims to ensure that customers love owning a Mercedes Benz and are so satisfied with the relationship between the brand and customer that they stay with the brand for a long time, ideally forever.
In a press release, the brand said, "Mercedes Benz is aiming for even stronger loyalty, higher repeat purchases and rapid growth in recurring revenue - both in services and parts and increasingly in over-the-air (OTA) updates and subscription services The growing number of connected cars offers significant revenue opportunities in the future, as the Mercedes-Benz fleet will reach a total of 20 million fully connected vehicles by 2025. "
5. Run in the electric propulsion and car software
As is the growing trend among car manufacturers these days, Mercedes Benz is striving for the lead in electric drive and car software with its "ambitious product development goals and the accelerated introduction of cutting-edge technology". As part of its "Electric First" strategy, Mercedes Benz has announced four new electric vehicles based on the upcoming large-car (EVA) electric vehicle architecture. The EQS luxury sedan is the first vehicle to emerge from this new architecture. It is scheduled to hit the market in 2021 with a range of more than 700 km on a single charge. The EQS is followed by the EQE, the EQS-SUV and the EQE-SUV. In addition, AMG, Maybach and G will present all electric models.
From 2025, the portfolio of electric vehicles on the second brand new dedicated electric platform, the Mercedes Benz Modular Architecture (MMA) for compact and medium-sized cars, will be expanded to include several additional models.
6. Lower the cost base and improve the industrial footprint
Mercedes Benz will also improve its profitability and cash generation, as well as taking steps to prepare for the company's future and accelerate the transition to an electric lineup. "The events of 2020 confirmed that the company's breakeven point is too high and too high, given the transformation challenges ahead," said the company. "Mercedes Benz will therefore take significant new steps in the period up to 2025 to lower the cost base and improve the industrial footprint."
The new Mercedes Benz strategy and its financial ambitions
With the realigned approach, the company's new strategy should deliver improved business performance through better pricing, an improved product portfolio, and growth in recurring sales. These developments, combined with the significant cost and industrial footprint measures, should result in structurally higher profitability.
By the year 2025, Mercedes Benz AG is aiming for a return on sales in the mid to high single-digit range even under unfavorable market conditions. The company's aim is to achieve a double-digit margin in a strong market environment.
“The basis of our new strategy is our highly qualified and motivated team. All of us at Mercedes Benz are determined to fulfill our ambitions. We will build the world's most desirable cars. That is our mission, that is what we want to deliver to our customers. We will make a technological leap. We will invest where we can win, grow smarter and redesign our industrial footprint. This enables us to improve profitability and increase shareholder value, ”said Källenius.
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