Mercedes sets new production record, extra shifts added on S-Class demand

Mercedes-Benz will set a new record for passenger car production in 2013 with the company on track to build 1.49 million cars in 2013, according to the firm's own forecast. According to a company press release this is the third consecutive year that Mercedes-Benz will have set a production record but there has been added momentum this year due to a number of factors, including the launch of the successful new A-Class at the end of 2012, the face-lifted E-Class and the brand new S-Class, which has had a hugely successful global market launch in recent weeks and months. Andreas Renschler, the Daimler board member for manufacturing and procurement agreed that this positive record was the result of important new model launches for the company. He said, "With this production record, Mercedes-Benz is setting yet another benchmark. This attests to the good customer response to our products. We will continue to grow with our attractive offering of models -- and will be able to accommodate the demand thanks to our high flexibility and the quality of the team." The impact of the company's new A-Class and the rest of the compact car range built on the new MFA modular architecture, such as the B-Class and CLA-Class, and soon to include the GLA-Class compact sport utility vehicle (SUV), can be measured in sales of the company's compact car ranges rising by a hugely accelerated 67.2% y/y in comparison to last year, with the plant's at Rastatt and Kecskémet, Hungary, running at full capacity.

Also key to this performance has been the revised E-Class, which Mercedes has said is the most comprehensive face-lift of any model it has ever produced. It has been received extremely well, with combined sales of the E-Class rose by 19% in November as a result. Another massively successful product launch, at least in terms of its early performance, that Mercedes-Benz has posted this year has been the S-Class. As the company's flagship model and with it enjoying such a high profile in multiple global markets, Mercedes-Benz has ensured that the model has experienced the most rapid and uniform global roll-out program of any in the company's history. The new S-Class was available in Europe since the end of July, in China since the end of September, and in the USA since mid-October, meaning it was rolled out in all its principal markets in a three-month period. In November it sold 7,617 units to regain its position as the global leader in the E2 segment. Production is forecast by IHS Automotive to increase by more than 40% y/y to over 100,000 units when production of the new S-Class comes fully on stream in 2014.

In order to fulfil customer deliveries Mercedes-Benz has been implementing extra shifts across a lot of its key production sites. At the Rastatt plant, 21 special shifts from January to November were agreed with the Works Council. Ten special shifts are planned in November and December for the production of the C-Class and the GLK in the Bremen plant. In the Sindelfingen plant, four Saturday shifts were introduced for the S-Class production and the working time was extended by around 30 minutes. And from the start of next year there will be further provision made in order to further ramp-up S-Class production, with a further 74 minutes of production per working day on the Sindelfingen line already agreed. In addition workers at the Untertürkheim powertrain plant have worked special shifts on every weekend in order to supply the body plants with engines, transmissions, axles and components.

Outlook and implications

Mercedes-Benz has come under criticism for its relatively poor performance in comparison to its peers BMW and Audi, especially with regards to some key financial metrics. There has been talk and reports of investor discontentment at the performance of Daimler CEO Dieter Zetsche as a result. These criticisms appeared harsh at times as the company was making some significant changes to its product strategy and in key product design areas such as styling. These are now filtering through, and under the direction of chief designer Gorden Wagener the company is now offering a range of attractive and highly contemporary designs that appear to be connecting with the younger buyer demographic they are aimed at. The feeling is that Wagener's design direction is taking Mercedes-Benz in the right direction and that his work could have a similar effect to that which Chris Bangle's had on the BMW brand in the last decade. The company can now compete head on with its key rivals in nearly all product categories, especially with regards to the efforts it has made in upgrading its compact car range. While the next year's launch of the new C-Class will also give the company the ammunition to take on the class-leading F30 BMW 3-Series. The new C-Class looks like a massive upgrade on its predecessor, with it likely to a massive upgrade in exterior and interior style and quality (see United States: 17 December 2013: NAIAS 2013: Mercedes-Benz shares 2015 C-Class details) and the launch of this model will fuel further production expansion next year. In truth all the big three premium OEM players, BMW, Audi and Mercedes-Benz are all riding the wave of the global premium car boom. However, IHS Automotive forecasts that although it will continue to trial BMW and Audi in the short to medium it will experience the highest growth in its production numbers in 2014, thanks the launch of the C-Class and the GLK-Class coming on stream, with output rising from 1.49 million units to 1.60 million units in 2014, BMW will still remain lead the way with volumes forecast to rise to 1.79 million units next year, up from 1.69 million units forecast in 2013. Audi will see its output rise from 1.60 to 1.68 million units.