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Mercedes: Making a bold statement

Date: 12 August 2014

Mercedes' fleet boss, Nick Andrews, reflects on a clutch of BusinessCar award wins and one of the firm's most successful years in fleet. Jack Carfrae reports.

Mercedes' fleet boss, Nick Andrews, reflects on a clutch of BusinessCar award wins and one of the firm's most successful years in fleet. Jack Carfrae reports.

"We've got a company car culture that simply doesn't exist in other parts of the world," says Nick Andrews, Mercedes' head of fleet sales.

"The Government over the years - they've tried all sorts haven't they? In terms of taxation and changes, but it hasn't really gone away. I actually think the company car is ingrained in UK culture."
Andrews took the helm of Mercedes' UK corporate sales just over two years ago and instantly shook things up by candidly admitting the company's previous failings to engage with business customers and announcing that it was "open for business".

Since then, the firm has embarked on a raft of new product launches, two of which received accolades from the fleet community in the 2014 BusinessCar Awards. The S-class was voted best Luxury car and the CLA came second in the coveted Business Car of the Year category. Mercedes also picked up the Highly Commended slot in the Manufacturer of the Year section, so it's had a good run and has proved popular with the voting public of fleet operators.  

Shortly after his arrival at the firm, Andrews also announced that he wanted Mercedes to overtake sector stalwarts Audi and BMW to become the biggest premium brand in fleet.
"It's great isn't it?" he says of his comments. "I love bold statements. All we're doing is playing. We never played on the field before.

"[The figures] are always subjective because it depends how you interpret them, but on pure fleet and business sales, so excluding rental, we had 19% growth last year, so we outperformed BMW on fleet and business sales in absolute numbers."

He continues: "If you look at total brand sales then yeah, we're in third place, but we moved into second place [for fleet and business sales] at the close of last year. And right now, for fleet and business sales we've got a 35% growth on this period last year. Audi and BMW are growing, but weare again outperforming BMW. So a bold statement, but one that we're very comfortable with.

  "What I'm not going to do is put a timescale on that [position] because everybody wants to nail you down. What I will say is that I made that statement in October 2012; coming out of the back of last year and today, we're ahead of BMW. Now, they may say 'you need to put rental in there, you need to put demonstrators in there, you need to add manufacturer registered cars', but I'm looking at what I would classify as pure fleet and business sales."

Bulking up

The company has poured significant investment into its fleet operations as part of the drive to take down its two biggest rivals, with more staff being a big chunk of it, as Andrews explains: "From a field perspective we've got 15 field-based managers, which is a significant investment compared to other manufacturers. I'm still quite a traditionalist and I like that face-to-face contact, and I've managed to persuade the organisation to invest in doing exactly that. Who's to say that's right or wrong? All I can say is that we've had one of our most successful years ever in terms of Mercedes and in particular fleet and business products. That is not simply a case of putting people on the ground, it's a combination of the strategy. Product has been blink and you'll miss it."

Andrews hosted a conference at Mercedes' Formula One headquarters in Brackley, Northamptonshire, in October 2012, where members of the leasing industry were made aware of the firm's plans to better engage with the corporate market. At the same time, he also hinted at the large number of new models in the pipeline: "At that conference we said we were going to have 'x' amount of new products in these segments. If you remember the slide, it showed current segments and then it showed a series of grey models - and we've delivered. And that's just set to continue."

He adds that the executive E-class, which was revised last year, has outsold its chief rival, the BMW 5-series: "If you look at the E-class offering, that is one of the largest segments in fleet and business and we outsold the BMW 5-series last year.

"If you took 10 people off the street from this industry and said which sold more - E-class or 5-series - I think nine people would say 5-series. In reality, we know because we've repositioned the E-class, we've taken the fight."

He puts part of the car's success down to a series of more straightforward trim level offerings: "Certainly, one of the strategies is to reduce the complexity of our derivative levels. We've still got some work to do in some of the model lines in order to get that. The product team have taken a pack approach [option packs rather than individual trim levels].

"Because we've done that we've gone to the whole-life-cost providers and the RV setters, and they have effectively incorporated the packs into their model descriptions. So they say, 'right, that car is coming with Comand satnav, leather etc.' - and, of course, you get an RV boost.

"In the world of fleet and business sales, when you get an RV boost, that effect brings the rental down. That rental coming down means it will appear on more company car policies across the UK, and appearing on more policies, you're appealing to the widest company car driver audience possible and that has an effect."

Andrews also claims the firm has undercut rival BMW on the CO2 emissions front, but the message has yet to get through: "CO2 - perception wise, you'd probably take nine [out of 10] people on the street and they'd say BMW have got a better CO2 position than Mercedes. Not the case. We've worked incredibly hard to reduce our CO2, and again that's meant more of our products have appeared on company car policies where [companies have] had a cap."

Value versus volume

The work behind the scenes means most of the company's recent models are faring well on the residual value front at present - you only have to look at the figures from the RV setters and whole-life-cost providers for proof - but ambitions to increase sales volumes carry their own threat of hampering RVs.
"There isn't a science in termsof a precise method of doing it," says Andrews when quizzed on the firm's volume aspirations. "One of the key things that we're doing - and this is one of the things people forget - is introducing products into new segments that we've never had before.

"If I take our [outgoing] C-class saloon, full-year sales across all channels last year were 13% down last year. But overall we've had growth, so the growth principally has been through new models in new segments.

"Look at the [BMW] 1-series and [Mercedes] A-class total sales last year. [There were] 36,000 1-series in the UK; our A-class was 18,000. Half. With 18,000 A-class, we've got more demand than we can supply, so used values are really strong - it's half the volume of the 1-series."

As well as the influx of new cars and opening its doors to the leasing industry, Mercedes has been chasing down business in the public sector. Back in 2012, Andrews told BusinessCar he was particularly keen on police business.

"It's gone really well," he says. "We have a dedicated strategic account manager, Rob Morris, for public sector and 'blue light'. I know we've had 250% growth in terms of volume sales into the segment.
"We have specifically developed covert and undercover blue light cars - heaven forbid you get stopped by a C350 estate! From memory, there's at least half a dozen fully 'blues' on the roads today. What Rob has effectively done is gone and knocked on the door of every police authority in the country and sat down with the decision maker.

"He's showed our retailer network how to exploit the opportunity in that public sector blue light services network, which most people thought: 'You know what? That's too complicated for me.' What Rob's done is simplified it and he's told people they can do it, and that's what led to this sales performance."

Andrews says the firm isn't gunning for fully liveried cars, but it does want a bigger slice of other police vehicles: "To get onto the 'blues and twos' offering - your stripes and liveries - that's a different kettle of fish, which is done on a tender basis. Realistically, we're not going to go for that segment. today. But in terms of high-performance motorway vehicles, we'd love to do that. Some of the 4x4 we'd love to develop, the Highways Agency, that sort of thing. We've got the product: M-class and GL-class."

Andrews claims the firm's recent success is down to a straightforward approach in its efforts to muscle its way to the number one premium manufacturer slot: "We have a very clear vision of the future and that is to be number one, and we've set out a very clear strategy of how we're going to achieve that.
"That strategy is a combination of people, process, product campaigns, marketing communications, customer intelligence and relationships, and our retailer network. And basically, if you mix those ingredients together correctly, [and] I'm not a scientist, but it seems to produce some great results."