Mercedes-Benz has jumped two places in the van sales table this year, moving from seventh to fifth position after a 9% rise in registrations.
Market share has increased by more than one percentage point, from 6.85% to 8.02%, while sales are up from 11,037 to 11,874 – the largest increase of any van manufacturer bar Peugeot. And it has done all this with a model line-up of just two vans: Vito and Sprinter.
Such a restricted range puts Mercedes-Benz at a disadvantage with some fleets which are looking for solus supply to accommodate all their needs, particularly as they look to downsize into smaller vans.
Mercedes-Benz will address this issue with the launch of the Renault Kangoo-based Citan at the start of 2013. We caught up with van sales and marketing director Steve Bridge to ask: are you really looking to become the UK’s second biggest van seller?
Fleet Van: The Citan is an important model for Mercedes-Benz but you have chosen to collaborate with Renault. Is it simply a re-badged Kangoo?
Steve Bridge: It’s a three-year project with Renault and we have made significant changes, particularly to the suspension to make the driving experience more in keeping with the Vito and Sprinter. It’s not as soft and the seats are firmer. As well as changing the seats, the Citan has a different dash and instruments, our own safety systems and the fit and finish of the panel gap is improved.
The engines and transmission are shared with Renault. They are strong engines with low CO2 so there was no point in investing in our own engines.
We need this van to complement our range. We have customers that take all our products but also a Volkswagen Caddy or equivalent because we don’t have it. But they want to have a relationship with just one manufacturer.
FV: You will have a petrol engine as well as three diesels (75, 90 and 115). Do you believe fleets will consider petrol as an option?
SB: It’s all about the residual value and the pricing guides see petrol as the devil. We have had problems with DPF – every manufacturer has had to wrestle with it – and fleets need to educate their drivers on the regeneration cycle.
We have indicators on our vans that tell them when it is on this cycle; the issue comes if you repeatedly interrupt it. We are having fewer issues with our Euro5 engines.
FV: Your sales are up by 7.5% this year in a market that is down by 8%. How is this being achieved?
SB: We amended some processes to change our year-end performance last year. So our finance schemes and campaigns continued into quarter one and two this year; we didn’t stop at the end of the year. This has borne fruit.
We had a lot of momentum from Q3 and Q4 last year which gave us a strong order bank for this year.
We also put more focus on local fleet, although we also had some notable wins in national fleet. We are ahead by 1,300 year-on-year, which is ahead of our plan, and we targeting to end the year at this level ahead.
FV: You have previously told us about your plans to become number two in the sales chart. Is this realistic?
SB: We do have ambitious growth plans. Stage one is at the end of 2012 if we achieve our aspirational target. Next year we will have the Citan and we are looking for a 4% share of an 80,000 segment .
We definitely want to be the second biggest. If we replicated our best practice across the brand in fleet and retail we would already be selling 44,000 a year without Citan . Vito is number one in retail, but not fleet; Sprinter is number one in fleet, but not retail. If we improved both we would double our annual sales.
There’s a huge marketplace and we need to increase our share of customers. We have a lot of Sprinter customers that don’t buy our medium van, for example. We haven’t enforced cross-deals but we have to be more capable of tailoring deals to a customer’s needs with basket pricing not individual pricing. We have some ideas to take a different approach to market, but that’s all I’m saying for now.
FV: Is part of the reason why you are launching Citan due to the trend for downsizing among fleet operators?
SB: We believe the small-medium-large van definitions need changing; the lines are blurred. We see customers optimising the size of vehicles they are operating but the worst at doing this are the large fleets. They tend to keep the vans they have always had. But with CO2 leg-slation and road fund licence we will see the van landscape
We are planning for a consultative selling approach with our dealers to understand customers’ needs – i.e. what job do they do – to ensure they get the right van. Are fleets ready for this consultative type approach? Some are.
FV: What impact has the recession had on fleet operations?
SB: Companies are more careful and less gung-ho about changing their vehicles. They are informed and they understand the wholelife cost model. More of them understand maintenance and residual values. All this is what we’ve been selling on for years.
A lot of fleets are innovative; they know they have to change and they are asking if we can help. We are looking at the opportunities of new and used vans. Is it essential that fleets buy new? Not necessarily. We have to get them into the brand and that might be a used van. We would like to do more of that.
By 2016 we want to be selling more than one million units a year for new and used; we sold around 600,000 last year . Traffic growth is expected to increase by 40% over the next 20 years but we won’t get all that on the road. We have to play with the vehicles that we have now.
Bridge is bullish and assured about Mercedes-Benz’s aspirations. He talks up the company’s propositions, but does so in the knowledge that it has the products to ‘walk the walk’. Fleet relationships play a central role in any success and new pricing initiatives plus a commitment to understanding and fulfilling customers’ needs – even helping those customers to understand their own needs – will help to pave the way for more solus-type partnerships.
With the UK van sector struggling to recover following the 2009 collapse, this approach could prove to be the key differentiating factor.