Mercedes-Benz defends discounting campaign

MERCEDES-BENZ Australia has defended a sales campaign that publicly acknowledges overstocking and invites potential customers to negotiate for the best price.

The Let’s Talk advertising campaign kicked off in February, pointing out that Mercedes needed to clear 2421 vehicles.

This approach came in for some criticism. Panellists on ABC-TV’s advertising program The Gruen Transfer said the campaign could damage the brand.

Mercedes-Benz Australia managing director Horst von Sanden said the campaign was necessary because of the current climate and real overstocking issues.

“The market is different to what it has ever been before, and I think it would be arrogant if we did not participate in the market as it is,” he said.

“The fact is that there is overproduction, oversupply and overstocking, and even we cannot afford to live with overstocking for a long period of time, so we just have to accept it.”

From top: Mercedes-Benz E63, M-class C-class Estate.

Mr von Sanden said the campaign was different to its past marketing, but added that such a step was necessary in such times.

“Our marketing campaign is pretty obviously an invitation to negotiate, which we haven’t had in the past.

“If anyone tells you ‘we don’t participate in this market and we don’t discount,’ it’s a lie, unless someone can afford to simply to leave cars in stock and wait until times get better.

“A car is not a good red wine it doesn’t get better with age.”

Mr von Sanden dismissed suggestions that the Let’s Talk campaign would hurt Mercedes' brand.

“I don’t think it will damage our brand. Our brand is built by product and many other things.”

Mr von Sanden admits Mercedes was caught out by the rapidly changing market, but had adjusted its orders to better match demand.

“Certainly the current downturn and the negative impact on the car market as a whole, and in particularly the luxury market, has somewhat surprised us, and we didn’t have enough time to adjust.

“But you would have heard of the production cuts which have been officially announced.

“We react and we have taken our marketing back to the current market size, but it is a bit of a crystal ball exercise all of the time,” he said.

VFACTS figures show Mercedes-Benz sales are down 22 per cent compared with last year.

Mercedes-Australia sales general manager Sam Curtis said it was unlikely his company would recover and sell as many cars as it did last year.

“Probably, the reality is that we won’t,” he said. “Neither will our competitors, just because of the economic times.”“It is about market share for us. If the total market does hit 850,000 and the luxury segment is probably 55,000, we want 25 per cent of that.”

Mercedes executives took the opportunity to gain customer market feedback on Wednesday when AMG customers and the media drove AMG cars around the Australian F1 Grand Prix track at Albert Park in what is believed to be a first at the lake-side circuit.

Mercedes will not discuss how much the event cost, but it is understood to represent a large chunk of its marketing budget.

The company has snubbed motor shows in recent years, preferring to instead invest the money in customer events such as the AGP event and a similar drive event at Bathurst last year.

Mr von Sanden said the brand would get a lot out of such events, even in a tough economic climate, and that it was important to continue looking after its customers.

“This is a once in a lifetime experience that we can share with our customers, and from a marketing perspective, that is what it is all about. If you can offer things that everyone else can offer it is not that special,” he said.

He conceded that it took a lot of time and effort to set-up up the unique drive program.

“We needed to twist some arms a little bit the negotiations were not that easy. The first answer was no, a very clear and distinct no, but we kept asking and negotiating and we finally got to the point we are today.”

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