Snubbing China ‘unthinkable’ for Mercedes, regardless of what road Europe takes

  • China is the biggest market for Mercedes and playing anything but an extremely strong game here may just be counter-productive for the German brand.
File photo used for representational purpose.
File photo used for representational purpose.

China is perhaps the most crucial market for Mercedes-Benz anywhere in the world. And it is easy to see why. The German luxury car maker sold 37 per cent of all its cars in China alone in 2022. The same year, around 18 per cent of overall revenue for Mercedes was from here alone. So even as Europe as a whole is looking at ways to bring down its dependency on China across multiple factors, Mercedes CEO Ola Kallenius doing so would be extremely difficult for Germany.

China is the world's largest car market and the world's largest electric vehicle market. Sales of luxury cars here too are the highest anywhere in the world. And though there is fierce competition between global automotive brands as well as against numerous local players, the market remains an extremely fertile ground for most. Our sales figures in China are increasing and I am quite optimistic that we will also grow this year. During the corona years, the wealthier Chinese in particular made extraordinary savings," Kallenius told German newspaper Bild recently. "This purchasing power should benefit us."

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But what about Europe as a whole looking at alternatives to China? “The major players in the global economy, Europe, the US and China, are so closely intertwined that decoupling from China makes no sense," Kallenius said.

Mercedes delivered over 7.51 lakh cars to customers in China in 2022. Arch rivals BMW dispatched 8.46 lakh BMW and Mini units to customers here in the same period. These are all big numbers, especially also because almost every major luxury car brand is also present here and doing good business. And while there is a fear of recession in many countries, China included, market watchers mostly agree that prospects for luxury car makers here remain optimistic.

With the advent of electric vehicles or EVs, the need to play a strong game in China is more important than ever before. Tesla is the global EV leader and has a strong presence here but Mercedes answered its price cut strategy with a price cut strategy of its own towards the end of 2022, showing yet again how important it is for companies to

First Published Date: 01 May 2023, 15:19 PM IST

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