Mercedes-Benz expecting 2019 sales bounce back

MERCEDES-BENZ Australia/Pacific (MBAP) is expecting renewed sales interest in the second half of the year after a 14.0 per cent year-on-year drop in new registrations in the first five months of trading, to 12,413 units.

According to the German prestige brand, a number of factors have played into its sales decline, including uncertainty surrounding the federal election and an infestation of stinkbugs that has also affected a number of other brands.

Speaking to journalists earlier this week at the launch of the A-Class sedan and AMG GT 4-door Coupe, MBAP managing director and chief executive Horst von Sanden called the last 12 months a “perfect storm” of events that contributed to the sales decline.

“We obviously had a very challenging 12 months, not only us, but we as much as everyone else,” he said.

“A few reasons for that, some reasons completely beyond our control, I mean we can’t control political uncertainty in the world and obviously in Australia, as well.

“We couldn’t control that there was a royal commission into banking, and also certainly then as a result of that, there were weaknesses in the real-estate housing market happening.

“All of this has certainly resulted in a much weaker consumer and business confidence, and that hit us and our industry and many other industries, of course.

“Then we faced some challenges with diesel homologation and certification issues which resulted in big delays, then nature hit us with these stupid animals called stinkbugs and all of a sudden ships were turned around and got lost for weeks if not months.

“That certainly caused frustrations with customers and certainly with us, but it also caused a lot of grief with our dealers – dealers lost a lot of money as a result of that and so did we.

“It was a bit of a ‘perfect storm’ scenario, but now luckily this is coming to an end.”

However, Mercedes-Benz is not the only prestige brand struggling to break new ground in Australia’s shrinking new-vehicle market this year, as BMW and Audi also face declining sales.

Audi has been hit the hardest in the first five months of 2019, dipping 29.0 per cent to just 6100 sales as key models such as the A1 light hatch, diesel Q7 and ground-breaking e-tron full-electric SUV are delayed.

Meanwhile, BMW has slowed by just 3.8 per cent, to 9882 units, buoyed by the launch of the new-generation 3 Series, X7 flagship SUV, Z4 convertible and 8 Series sportscar.

As for the smaller prestige brands, Alfa Romeo has clocked 373 sales (-26.7%), Infiniti has 253 registrations (+38.3%), Lexus is line-ball with last year on 3838 sales, and Volvo is continuing its upward momentum with 3029 units sold (+27.1%).

However, Mr von Sanden said the landscape was already shifting and that the brand is seeing positive signs in the Australian market.

“We could immediately see – after the federal election finished – some positive trends,” he said.

“It coincided obviously with an interest-rate decrease and also the northern hemisphere started to warm up, which meant instead of hiding in vehicles, the stinkbugs got out and started to mate and multiply for next year.

“There were some very good signs from an economical point of view and what it did to us was very pleasing, the last two weeks … we had the highest order intake since 2017, so we took more than 900 units per week, and that is 50 per cent above the year-to-date average.

“On top of that, what adds to that confidence is that we have some good product in the pipeline to come.”

The second half of the year will see Mercedes launch more product to support its growth ambitions, including the new-generation GLE next month, the facelifted GLC mid-size SUV in August and the aforementioned EQC in October, as well as the stylish CLA sedan and GLS upper-large SUV before year’s end.

The A-Class sedan line-up will also be heavily bolstered by the arrival of the Mercedes-AMG A35 four-door arriving just a month after the hatchback in September, the front-drive A250 in November and the all-paw version of it in the first quarter of 2020.

Finally, the top-tier 310kW/500Nm A45 hyper hatch is also due to land in showrooms early next year.

However, the Victorian government is also planning on introducing its own luxury car tax (LCT) from July, slugging vehicles costing between $100,000 and $150,000 with a seven per cent charge and vehicles with price tags over $150,000 with a nine per cent levy.

Mercedes-Benz will fight the new tariff (see separate story), but the brand does expect sales to slow in Victoria as a result.

Overall, however, Mr von Sanden is predicting blue skies ahead for the MBAP, telling journalists that “we are confident times are getting better for us, and we are also obviously excited that in a period where change is probably the most dominating thing, that at least some stability kicks back in.

“We’re certainly planning for some growth in the second half of 2019, certainly within the factors within our control, we’re do everything possible, the factors we can’t control seem to line-up a little bit more positively, so that’s why we are moderately confident,” he said.

“Obviously after quite a difficult first half of the year, our second half the year should be better – and not only ours, but the industry should be much better.”