When I say the word “Mercedes” to you, what comes to mind? A GT-Black Series? A G-63 AMG? Bono saying “Get in there Lewis!” ?
Does a 50-year-old man in an S-Class ever strike your mind? The chances of that crossing your mind is relatively small, and therein lies Mercedes’ success over the past years.
You see, in 2013, an analysis reported that Mercedes had one of the highest average age of buyers in the world. While this still keeps Mercedes an enviable brand, rather than a mass market brand. However, the average age being that high comes with a very detrimental problem: falling out of trend.
Cars have long passed the “commodity” category, rather it is a statement, part of popular culture. For a luxury brand like Mercedes, that relevancy in pop culture is very crucial in maintaining its sales. If it was in a position like Rolls Royce, where the focus is on limited numbers, high margin elite cars, then the age of the buyer is not an issue. However the bulk of sales lies within the youth, so keeping relevant with them is key if you want sales numbers, and Merc wanted sales numbers.
Role Of F1
F1 played a pivotal, I mean, absolutely pivotal role in making Mercedes cool again. Although the involvement of Merc in the team was entirely financial, that too only 50%, the branding alone made the manufacturer absolutely relevant to the times.
I mean, people always question the financial sensibility of being in F1, before the budget cap. “Why would you pour millions of dollars in an investment knowing it’s a loss-making asset?” they ask.
Look no further than what Mercedes has been able to achieve by being in that position of winning multiple championships! You just cannot buy brand recognition like that! You build it, you nurture it, and Mercedes absolutely nailed it. Moreover, during the Mercedes domination era, the audience of F1 itself became younger, helping Merc even more!
As the years progressed, and the domination increased, the respect that the company got for their performance was unimaginable. This fuelled right into the AMG Series. If you have a look at the sales of AMG, you can see a very clear spike in sales from 2014, the beginning of the hybrid era.
Moreover, the entire company basically was on fire at this point. From 2014-2021, just look at the cars Merc has produced, the classics: G63, E63, SL55 cab, AMG GTR.. the list is endless.
The masterstroke certainly was with the new A-Class in my opinion. Although they made a slight misstep debuting the new design language with the A, then showing it with the C, E then the S. The A class was leaps and bounds ahead of the rest, and even its own C class at that time.
Moreover, the later AMG models made that valuable AMG brand even more accessible and gave Merc more sales.
Chasing sales is NEVER a bad thing. But it has to be done the right way. From building the brand to nurturing it, to utilising it to drive sales, Mercedes has absolutely nailed it. Have a listen to Merc CEO Ola Källenius talk about their software stack on the Decoder podcast, they’re thinking like a tech CEO, and pivoting the culture according to that!
Mercedes is approaching every aspect of it with the right mentality, and are changing themselves according to the needs of today.