Mercedes risks losing luxury car market dominance as challengers like Tesla rise
Mercedes-Benz sold 2.31 million passenger cars last year, which was probably enough to make it the top-selling premium automotive brand in 2018, although some analysts are questioning how much longer German manufacturers can dominate the luxury car industry.
BMW, Audi and Daimlerowned Mercedes-Benz have held sway in the market for high-performance limousines for decades, but analysts warn a shift toward electric and autonomous cars could open the door to new challengers, such as US-based manufacturer Tesla.
“The question is whether Tesla is the Apple of the auto industry and the established premium brands will become the Nokias and Blackberries,” UBS analyst Patrick Hummel said, referring to Apple’s successful disruption of the mobile phone market that Nokia and Blackberry once dominated.
Tesla delivered 245,240 vehicles in 2018, according to the company.
The success of the German carmaker is based on the sales of internal-combustion vehicles at a time when customers are seeking newer electric cars with sophisticated software- based infotainment systems.
German car producers are also launching electric vehicles, but their profits come mainly from sales of high-horsepower diesel and gasoline vehicles.
Mercedes-Benz posted a new sales record last year thanks to an 11 percent sales jump in China, the world’s largest car market, while sales in the US and Europe fell 6.3 percent and 2.3 percent, respectively.
Sales of its flagship S-class saloon were up 12 percent, while more than one-third of customers chose to buy a sport utility vehicle (SUV), and about 25 percent of sales were com- pact cars, Mercedes-Benz said.
“In 2018 Mercedes-Benz was at the top of the premium segment in the automotive industry for the third year in a row,” said Daimler Chief Executive Dieter Zetsche.
Analysts said the company stayed ahead of BMW and Volkswagen-owned Audi thanks to increased production capacity in China.
“Mercedes currently has a significant lead over BMW and it is a two-horse race for now. Audi will be behind for a number of years,” Nord LB analyst Frank Schwope said.
BMW Group, which includes the Mini and Rolls- Royce brands, sold 2.49 million cars last year.
Hummel said Tesla could pose a threat in the medium term because it offers better connectivity and over-the-air updates.
“Tesla has a lead of three to four years in areas like software and electronics. The millennials are much more focused on these things. There is a risk that the Germans can’t catch up,” he said.