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Exports give Mercedes sales impetus

3 Feb 2016

Mercedes-Benz SA is exporting nearly 90% of C-Class production at its East London assembly plant, as the addition of new foreign markets compensates for a continuing industrywide slide in domestic sales.

Image source: BDlive

Photographer: Puxley Makgatho

The latest local figures, released on Monday by the National Association of Automobile Manufacturers of SA (Naamsa), showed January new-vehicle sales down 6.9% from a year earlier, and car sales 6.1% weaker. Analysts expect the full-year 2016 market to shrink for a third successive year, by as much as 10%. Consumer sales, excluding car-rental and government orders, hit their lowest monthly level since April 2011.

However, Mercedes CEO Arno van der Merwe said on Monday that the company achieved record production last year, as its German parent company allocated new export destinations. Some were in Asia, but the biggest coup was a return to the US market in October. Before production of the current C-Class began in 2014, Mercedes's biggest customer was the US.

But the current model is also built there and the SA firm feared the market was lost. But now, the US is back among its five biggest destinations, alongside Japan, the UK and Australia. The company exports C-Class cars to more than 80 countries.

"The global Mercedes-Benz production model has always been one of flexibility, with the ability to shift capacity between plants. We're building the same cars and the same derivatives as they do in the States. We are supplementing their capacity," Van der Merwe said.

When the current C-Class was planned for East London, the target was for exports to take 80%-85% of the annual 100,000 capacity.

"We have now exceeded that," he said. "However, this is not unexpected. It was always part of the long-term plan to add new markets, and reduce dependence on one region."

He added that the rand's weakness against foreign currencies had not done the SA company any harm. Apart from the C-Class, it imports everything that it sells in SA. Mercedes-Benz SA is a net exporter with a positive trade balance - a situation the company has also enjoyed with a much stronger local currency.

"We agree the rand needs to be balanced and stable, but there's no denying the current situation makes us more competitive," he said.

Source: Business Day

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