Malaysia remains a key market for Mercedes-Benz

This article first appeared in The Edge Malaysia Weekly, on April 16, 2018 - April 22, 2018.
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MALAYSIA remains a key market for Mercedes-Benz in Southeast Asia, with sales of a record 12,045 units last year, nearly twice as many as Singapore, the next best market.

The number of units sold by Mercedes-Benz Malaysia Sdn Bhd (MBM) last year was a 2.3% increase over the previous year. Mercedes-Benz sold 6,227 vehicles in Singapore and 3,386 in Indonesia.

It was the fourth straight year of record sales for MBM, which is all the more impressive given the challenging outlook for the domestic automotive market, with total industry vehicle sales falling for a second consecutive year.

MBM president and CEO Dr Claus Weidner attributes the strong gains to its long-term strategy of focusing on a seamless customer experience.

MBM also has a network of 33 dealerships nationwide — the highest among the country’s premium auto makers — and still counting.

Weidner says the company is constantly looking for potential areas for expansion. In assessing whether to expand its presence through a dealership or a new Autohaus showroom, MBM looks into the economic opportunities of the area, such as its size, population, gross domestic product, development of its residential and industrial components, the level of infrastructure and income levels.

“We have to plan upfront because such investments are a commitment of 5 to 10 years. So, we need to see if the area has potential to grow going forward,” he tells The Edge in a recent interview.

“Wherever we see potential for business that makes economic sense, we definitely look into expansion. This is going (in) together with our regional partners, and it is not only focused on established markets like the Klang Valley and Penang, but beyond that.”

In the past two years, MBM has opened 16 new dealerships and upgraded and refurbished its local Autohauses.

Weidner observes that a lot has been invested in these upgrades and development to maintain standards and enhance the customer experience. Along the value chain, Mercedes-Benz's investments in Malaysia since 2003 exceed RM1 billion, which includes training, local production and network development.

“It is not only the quantity, but qualitative upgrades as well. We constantly try to raise our standards of service so all of our Autohauses provide the same experience.”

 

MBM finds the right recipe as the premium segment grows

While the outlook for the domestic automotive sector remains challenging, the premium segment is growing. According to Malaysian Automotive Association data, MBM’s strong performance in Malaysia is in line with the 5.6% expansion of vehicle sales in the premium segment.

Weidner says that the company’s customer-centric strategy has contributed to its growth and MBM believes that this is the foundation of its success.

The after-sales value-added services it offers include The Star Lounge, Premier Express Service, Drop & Go and Door-to-door Service.

In addition, MBM uses a digital platform to ensure customers have a seamless experience in learning about a vehicle’s features and other details even before they arrive at a showroom. But new product offerings have also boosted sales. In 2017, for instance, 17 new models were launched.

Another growth driver is the company’s automotive financing services arm, which provided loans for 35% to 40% of MBM’s unit sales.

“We offer a comprehensive package that covers the financing of the car, insurance and after-sales service. It has grown substantially since its inception five years ago, and we are looking to broaden this portfolio,” says Weidner.

 

MBM continues to actively participate in the auto industry

Despite the successes of the last few years, Weidner acknowledges that the environment  of the industry is changing. He says MBM is looking to be a part of the shift — not reacting to what is coming but being proactively involved in the technological advancements. It is in constant contact with the authorities on proposed developments to the National Automotive Policy (NAP), the revised version of which will be released in the middle of this year.

“We are very happy to have had positive dialogue with the government ... and so far, it has proved to be very constructive,” he says.

MBM has also developed a RM74 million training academy, in line with the NAP objective to position the country as an energy-efficient vehicle (EEV) hub in the region.

“Our own in-house training centre caters for all trainees in Malaysia — product, technical and vocational training. We take in 60 students a year for a three-year programme to develop skilled technicians.

“Definitely, the market has developed and a lot of other players are also offering EEV, which is good and positive for the industry,” Weidner says.

In tandem, MBM has built EEV charging stations in shopping malls, at petrol stations and in office buildings. They are accessible at no charge to all drivers of hybrid cars.

“We are not an infrastructure provider but the fact that we can offer these charging stations as a value-add to our plug-in hybrid customers, as well as those who have yet to convert from a different brand, is something extra.

“We are looking very positively into the market development, and I can say we are very confident to be on the same upward trajectory that we have been in the last few years,” he says.

Weidner says MBM has no plans to follow Group PSA, which recently acquired a 56% stake in the Naza Automotive Manufacturing plant in Gurun, Kedah, to transform it into a manufacturing hub in Asean for the French car maker.

He says such a move would depend on the economic feasibility and existing regulations, but he indicates that MBM is constantly evaluating its options.

 

 

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