Mercedes races ahead of BMW in 2016 sales

For luxury car manufacturers such as Mercedes-Benz, BMW, Audi and Tata Motors-owned Jaguar Land Rover, globally 2016 has been a record sales year. All four carmakers recorded their best-ever sales in a calendar year.

The German triumvirate of Mercedes-Benz, BMW and Audi has been battling for the No.1 position in global luxury car sales, a position BMW had held for long since 2005. With 2016 numbers having been revealed by the three arch rivals, Mercedes-Benz has emerged as the leader, thanks to expansion in its product portfolio.

Mercedes-Benz notched up its best-ever sales and posted double-digit growth in Europe and some high growth in the Asia-Pacific or APAC region. Surging sales in China, the world’s largest automobile market, helped maintain the momentum throughout the year. The Stuttgart-based company grew at a double-digit rate in 2016 and for the first time sold more than two million vehicles – 20,83,888 – in one year worldwide (+11.3 percent). In 2016, Mercedes-Benz recorded the most new-car registrations in many countries, such as in Germany and in the US.

The AMG arm of Mercedes set a new record last year with sales of approximately 100,000 vehicles (+44.1 percent). In 2016, its ‘smart’ brand sold more cars than ever before in one year (144,479 units, +21 percent). This means that not only did Mercedes-Benz grow faster worldwide than its German competitors, but also that it sold the most cars in the premium segment.

In comparison, BMW sold a total of 20,03,359 units (+5.2 percent) and Audi sold 18,71,350 units (+3.8  percent) in 2016. In full-year 2016, Mercedes-Benz was the best-selling premium brand in Germany, Italy, Portugal, Japan, South Korea, Australia, Taiwan, the US and Canada.

Tata Motors-owned Jaguar Land Rover reported its best-ever full-year global sales in 2016, selling 583,313 vehicles, up 20 percent on 2015 and posting record sales in the UK, North America and Europe. Volvo Cars too, reported record sales in 2016, increasing 6.2 percent to 534,332 cars. Further, General Motors' premium brand Cadillac posted its highest-ever sales since 1986.

“2016 was the most successful year for Mercedes-Benz in the history of the company, and the sixth record year in succession. With new cars pioneering design that inspire our customers and with particularly strong growth in China and Europe, we have climbed to the top of the premium segment. And we are accelerating further – with new technologies, products and services,” Dieter Zetsche, chairman of the Board of Management of Daimler AG and head of Mercedes-Benz Cars, said.

“Mercedes-Benz is now a premium brand with the strongest unit sales; we have achieved our goal four years earlier than we aimed for,” said Ola Källenius, a member of the board of management of Daimler AG so far responsible for Mercedes-Benz Cars' marketing and sales and since January 1, 2017. He's also responsible for group research and Mercedes-Benz cars development.

The year 2016 ended for Mercedes-Benz with the highest-ever unit sales in December, which was also the 46th consecutive record month (190,269 units, +6.8 percent), and with the best quarter of all time (545,967 units, +10.2 percent).

India sales down

Mercedes-Benz India registered sales of 13,231 units during January-December 2016, down 2.01 percent from 13,502 units sold in the same period in 2015.

Last year was a mixed bag for the German carmaker as it grappled with a host of challenges which weighed heavy on its domestic sales. The Supreme Court’s ban on registration of diesel vehicles above 2,000cc brought sales in its key market of Delhi-NCR to a halt until it was lifted in August 2016 against a levy of additional cess. The government levied an additional 1 percent tax on purchase of luxury cars priced more than Rs 10 lakh in the Union Budget 2016.

The recent demonetisation move also resulted in lower footfalls at showrooms and car buyers were reported to defer buying decisions. Company MD and CEO Roland Folger said in December 2016 that it would be difficult for the carmaker to match the sales growth of 2015 due to the currency notes ban as well as restriction on diesel. The company had registered sales of 13,502 cars in 2015, up 32 percent over the previous year. But Folger said going forward demonetisation would not affect their plans for 2017.

The carmaker did manage to revive its sales volumes after the diesel ban was lifted by the Supreme Court in August 2016, on the back of new launches. It registered a growth in sales in the third and fourth quarters compared with the previous quarter (see table). Besides, the cash crunch due to scrapping of Rs 500 and Rs 1,000 currency notes is not a big concern for Mercedes since about 95 percent of its vehicles are financed, said Folger on the sidelines of the CLA facelift launch last year.

For Mercedes, the key volume driver last year was the SUV range, which grew by more than 20 percent, and the GLE emerged as the highest sold SUV. Within the sedan segment, the C-Class remained the highest selling sedan for January-December 2016, closely followed by the E-Class and the S-Class.

Meanwhile, key rival BMW registered sales of 7,861 units in the calendar year 2016, a year-on-year growth of 14 percent. Total sales comprised 7,500 BMW cars and 361 Minis, the carmaker said in a statement today.

Indian luxury car market growth muted

The luxury car segment in India is estimated to have seen a slowdown in growth, tailing the decline in sales of market leader Mercedes-Benz. According to industry sources, volumes in the segment are estimated to be around 35,000 units in 2016, a decline of up to 3 percent, from around 36,000 units in 2015.

“2016 has not been an easy year for the automotive industry… During the course of the year, developments in the Indian economy and policy framework shook the mechanisms of the auto industry,” according to Frank Schloeder, president (act.), BMW Group India.

Going ahead, the uncertainty around the Goods and Services Tax (GST) is likely to keep buyers on the sidelines. As per the current structure, luxury cars will fall under the peak rate along with attracting an additional cess over and above the 28 percent set by the GST council. As a result, there is unlikely to be a significant uptick in demand. Moreover, the customs duty is among the taxes which will be left out of the GST and, therefore, prices of vehicles brought in as imports or Completely Built Up (CBU) units are unlikely to change.