Mercedes-Benz South Africa bucks the trend

Dr Hansgeorg Niefer

At a special briefing for motor industry journalists and financial writers at the new Mercedes-Benz Bedfordview lifestyle outlet near the OR Tambo Airport in Johannesburg, Dr Hansgeorg Niefer, chairman of MBSA, said in spite of tough trading conditions, the group (Mercedes-Benz South Africa, Mercedes-Benz Financial Services, Debis Fleet Management, Sandown Motor Holdings and Atlantis Foundries) posted positive growth for the 10th consecutive year in almost every segment of its business.

Accelerating growth despite economic factors

He said the results were fueled by a continued demand for the group's premium vehicle brands, despite inflationary pressures, rising interest rates and general consumer caution.

“Highlights of the year included the strong demand for our new Mercedes-Benz C-Class, good commercial vehicles sales and a firm control on overhead expenditure.”

During the year under review MBSA paid more than R813 million in taxes and more than R1530 million in wages.

Passenger car sales totaled 32,144 during 2007 to give the group a 7.5% share of this competitive segment of the market.

Dr Niefer said the high passenger car sales were particularly remarkable when viewed against a background of significant fuel price increases, the introduction of the National Credit Act, a strike within the component industry and escalating interest rates.

He said much of the success in this market could be contributed to the new C-Class, of which 9,315 had been sold by the third week of March this year.

The C-Class is manufactured at the company's plant in East London, both for the local and export market (including left-hand drive models for the American market).

Cashing in on commercial market

The commercial vehicle business was another key element contributing to MBSA's bottom line. A total of 5,870 vehicles were sold in 2007 (not including Chrysler products, following the separation of the companies in December 2007) to notch up a market share of 23.3%, which is well ahead of its closest competitor at 14.5%.

Bestsellers were Freightliner trucks which grew 42% on the back of 1,181 units versus 831 units the year before, followed by FUSO, which jumped by 35% from 1,160 in 2006 to 1,571 in 2007.

Dr Niefer said he was particularly proud of the fact that the group's manufacturing plant at East London received the prestigious JD Power quality award, as it had pumped over R2 billion into sophisticated precision equipment and staff training just for the C-Class alone.

In addition to this already substantial investment, a further R200 million would be invested by MBSA this year for the local production of the new Mitsubishi Triton LCV.

During the year under review Mercedes-Benz Financial Services, which provides financing and insurance products at the dealerships, grew its revenue by 31.4%. A finance package for emerging entrepreneurs has proved very successful, with R90 million of the available fund of R300 million being approved and allocated in just four months.

Dr Niefer said the retail division of the Mercedes-Benz SA group, Sandown Motor Holdings, enjoyed a particularly exciting year to record a record turnover of R7.3 billion.

“Overall our success last year can be regarded as further evidence that the South African operations of Mercedes-Benz are consistent and are providing a solid contribution not only locally, but to the global conglomerate's activities,” he said.

Focus on Black diamonds

However, he was another no illusions that 2008 was going to be a tough year. “But our retail people will work harder and focus on specific market sectors. After peaking in 2007 we don't want to take a downward turn in 2008.”

He said part of MBSA's strategy for the year ahead was to get closer to the emerging and rapidly growing black market.

With a number of recently launched new products and several more new vehicles scheduled for local introduction in the year ahead (including the C-Class Estate, the R-Class, the C63 AMG, the SLK55 AMG, the M-Class, the CLC sports coupe, Mitsubishi Lancer, Pajero Sport, the EvoX, specialised trucks and buses) he was upbeat about 2008.

“We are not stopping, closing plants, or even slowing down. For us at MBSA this is going to be a “foot down hard on the accelerator” year and we look forward to the challenges and success it will bring,” Dr Niefer said.