MERCEDES: Seeking a new sales consistency
08 March 2011
New UK MD Gary Savage explains why he's seeking an end to Mercedes' 'schizophrenic' behaviour in order to boost fleet sales. Guy Bird reports
Talk to recently appointed Mercedes-Benz UK managing director Gary Savage and it's clear the way the marque approaches fleet business is going to change considerably.
The former UK head of sales and marketing at Audi (and most recently, if briefly, UK MD of Citroen) joined Mercedes in late June 2010 and believes a new way forward is needed, as he candidly tells BusinessCar: "Given my experience elsewhere it was evident to me that one of the key components of our success was having a more consistent relationship. It did strike me as just simply schizophrenic [at Mercedes]. As a result it made it difficult for the team at Mercedes-Benz UK to be as successful as they would want to be and have the potential to be. It's simply about leadership."
Ask him to pin down exactly what was so wrong with how Mercedes dealt with fleet business in the past and he's less explicit, but does point out how the marque's strong retail approach caused a few headaches, continuing. "Contract hire firms want a longer-term relationship with the manufacturer and we were very much in a retail cycle with a quarter-by-quarter campaign," he says. "But the ordering horizon of the contract hire and leasing industry is beyond that. Really I think the difficulty has been around the campaigns - the medium- to longer-term offer - being able to say to them, 'this is the offer now for the next six-to-nine-to-12 months'. That's just one small example of what I mean by us not being consistent."
The difficult trading conditions of the past few years didn't help. "The industry as a whole has been in uncharted territory, in terms of the recession," says Savage, "and from my perspective that has merely amplified the need to have a more consistent approach. When there were shortcomings in the retail market we possibly tried to offset some of that by going into the fleet market. But we probably found it more difficult to penetrate the fleet opportunity because we hadn't been so omnipresent; we were certainly just less skilled at it. We have a very robust fleet team; it's just a question of direction and support. It's not numbers."
Which is just as well, as on face value Mercedes' overall 2010 UK sales tally of 74,812 doesn't look so great compared with those of their German premium rivals BMW (109,418) and Audi (99,828). But Savage is quick to point out that most of that difference can be accounted for by Mercedes' current lack of properly targeted smaller-car product to take on the Audi A3 or BMW 1-series, although that's soon to be rectified with a new quartet of small cars spearheaded by a more VW Golf-like A-class in autumn 2012. As Savage adds: "We outperform Audi significantly in terms of C-class versus A4, E-class versus A6 and S-class versus A8. It's about maintaining that dominance with incremental sales coming from new products in new segments."
Before the new A-class next year - which will be nothing like its currently slightly fussy compact MPV incarnation - there will be a new B-class in November 2011 aimed more closely at the Audi A3 Sportback. Then in early 2013 a Nissan Qashqai-sized small 4x4 crossover with two-wheel drive options to take on BMW's current X1 and Audi's forthcoming Q3 will arrive, plus later in 2013 a new introduction that as yet doesn't have any rivals in the form of a 'mini-me' small four-door coupe version of the brand's CLS.
These products help explain Savage's prediction of 100,000 Mercedes UK sales by 2013, but for 2011 he's only looking for a small step from 75,000 to circa 80,000 mainly on the back of the new C-class Coupe's introduction.
Given his experience at Audi, does he want to get Mercedes to a similar level of UK fleet penetration, currently 62% compared with Merc's 54%? Not likely. "I think that's too high," he says. "To my mind it's about maintaining the level of volume superiority over our competition in terms of retail and building the fleet opportunity. The incremental growth comes from fleet. Clearly it will start to skew our percentages but we sell 1000 more C-class cars to retail customers than BMW sells 3-series cars and I want to maintain that differential."
Finally as to the 'how', Savage is more coy but thinks it's less about radical innovation and more about getting the basics right: "It's just good best practice. We have the right brand image, the right product and a fantastic dealer network to service the fleet community. It's about bringing all that together. It's the 5% of the recipe that we'll bring to make sure we all fire on the appropriate cylinders."