BBA – MBA Integrated Programme

(2017 – 22)
Summer Internship

MERCEDES-BENZ AG

Final Internship Report

(phase-1)
Submitted on
24th May, 2020

Submitted by
SHIRAZ NAGARIA (177149)
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About the company
With its headquarters in Stuttgart, Germany, Daimler AG is the face behind the successful
German automotive corporation we know as Mercedes-Benz today. The brand is considered to
be one of the most luxurious prestigious brands in the market today. Mercedes-Benz cars is one
of the 5 business corporations run by Daimler Group, others include Mercedes-Benz Vans,
Daimler Trucks, Daimler Buses & Daimler Financial Services. Daimler AG is considered one of
the largest producers of commercial vehicles, with an excellency in production of its
commercial as well as private vehicles.
Mercedes-Benz AG aspires to be leading in the fields of automated driving, connectivity and
alternative driving technologies with its forward-looking innovations. The product portfolio of
the brand is spread across sub-brands Mercedes-AMG, Mercedes-Benz Maybach, Mercedes-
Benz me and the brand EQ Product that uses electric mobility. According to reports, the
company sold nearly 24lakh cars and over 4.38lakh vans. In its two divisions, the corporations
are expanding extensively in many nations, with control in 40 production sites across 4
continents, while tackling with the requirements of electric mobility. At the same time the
company has invested in their global battery production network across 3 continents to rise for
a sustainable future. Sustainability to Mercedes-Benz means creating value for all its stake
holders on a long term lasting basis.
History of Mercedes-Benz AG
The brand Mercedes-Benz has been around for over a century, having evolved through the
smooth and rough stages of the automotive industry. It is interesting to know that the ‘Fathers’
of the Mercedes-Benz brand are responsible for the modern day combustion engine. During the
1800s, when mahogany canes and high-top hats were the ultimate fashion and social
prominence statements, two men were working on something entirely different, something
they may not have known that would change transportation methods to a whole new level. Karl
Benz & Gottlieb Daimler were the men responsible for the creation and innovation of the
combustion engine. Although the 1888 archetype of the modern engine was not a result of
teamwork but of independent and synchronous research and development. Historical accounts
point that both the engineers lived in Southern Germany, they actually never met in person.
Despite the fact that they shared equal contributions in the innovation of the four-stroke
engine, Gottlieb Daimler was given more attention to which eventually led to world spread rate.
Daimler had success in the car racing area, which led to his alliance with an Austrian
businessman named Emil Jellinek approached Gottlieb with a business proposition. Daimler and
his chief-engineer Wilhelm Maybach’s work had pleased the Austrian Businessman. His offer
was that a large number of cars would be ordered in exchange for a name change from Daimler
to Mercedes- Jellinek’s Daughter’s name and the right to alter the car’s design as well as the
right to resell the vehicles in European countries, including Austria, Belgium & France. Before

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the outbreak of World War-I, Gottlieb Daimler had gained great reputation in the industry,
more than that of Benz. In 1908, both parties shared the podium with winnings in the French
Grand Prix.
To cater the demands of the army during WW-I, the factories were converted. Post this, both
rivals were brought together, leading to a merger with Benz & Cie in 1926, collaborating to
form a larger unit Daimler-Benz AG. Ever since, Mercedes-Benz has brought into the industry
some of the best cars in the world, standing as a symbol cutting edge technology and flawless
quality. Despite of the criticism faced by the company during the WW-II pertaining to alleged
forced employment and violation of human rights, they managed to building their strong
automotive empire, supported by their more-than-above-average customers, which included
state leaders and rich families.
Nearly 28 years after the introduction of the prototype of a four-stroke gasoline cylinder by
Otto, Wilhelm Maybach drew the perfect idea of building an engine for Daimler which would be
used in boats only. This dream of Wilhelm took about 8 years to be perfected in the Daimler
Phoenix model, the first vehicle which had such an engine. While the same time, Karl Benz was
working on a four cylinder horizontally-opposed piston engine bringing improvement in the
previous 1898 contra-design. This brought about some phenomenal changes in the new design.
It made more space to fit turbo or superchargers, which was appreciated in performance
vehicles.
The 1900s reveled a second series of engineering innovations with the ‘Hammer’ engine
developed by Maybach that earned its name for the dual-camshaft controlled lateral intake and
exhaust valves. Also, in 1902, a racing car was introduced by Daimler by the name simplex
design, powered by an in-line four-cylinder engine. To ensure low working temperatures, the
simplex design was boasted with double walled cylinders to accommodate and even cooling
water flow as close as possible to the heat source.
The origin of hybrid vehicles is not of recent as it seems. The introductions can be traced back
to the 1900s, when Mercedes Mixte range was introduced. These cars used 70hp engines to
power electrical generators. A special device or ‘hub’ was then used to convert the obtained
electrical energy into drive power.
During the 50’s, Benz produced some of the most elegant looking cars of the time, such as the
300SL. This model was one of the first production vehicles to benefit from early fuel-injection
technology. By the time the 80’s came, the growing knowledge was already spread of CO2
emissions and pollution caused by cars. Mercedes-Benz was one of the first to comply with
regulations through introducing the closed-loop three-way catalytic converter in 1985. This led
to th Subsequent to denoting another period in mechanical supercharging innovation,
Mercedes proceeded to cross new outskirts through the arrival of new building ideas and
weighty plans. The Blue Tec framework divulged in 2005 was created in view of just one
however: cutting CO2 discharges, accomplishment made conceivable using SCR (Selective

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Catalytic Reduction). Two other eminent occasions happened that year with the arrival of the A
200 Turbo motor for the A-Klasse and the natural looking Bionic idea.

Mercedes – Benz was the first to fit ABS and ESP frameworks on its vehicles and of late it has
genuinely gone too far with the DiesOtto motor which debuted at the 2004 Frankfurt Moto
Show. The DiesOtto flaunts variable burning chambers while conveying the benefits of both gas
and diesel drives. Its CAI (Controlled Auto Ignition) permits the flash attachments to quit
terminating at higher temperatures when fuel, gas for this situation, can be lighted a similar
way diesel can. The course analysts have taken to accomplish variable ignition chambers stays
uncovered at this point in spite of the fact that it makes certain to be made open in a couple of
years from now when the DiesOtto is probably going to turn over supplanting ordinary motors
advancement of the company’s vehicles.

Historical landmarks
Mercedes-Benz AG traces back to over 100 years of existence with a large number of historical
artifacts, including cars that were initially built, the production house where the cars were
produced, the place where the founders were born and where they lived. Some of the
important historical landmarks of Mercedes-Benz AG would include Carl Benz workshop in
Mannheim, the Mercedes-Benz Museum, the last residence of Carl Benz, test track in
Untertukheim, the residence of Gottlieb Daimler, to name a few.
Carl Benz Workshop in Mannheim

In an effort to start the first mechanical workshop, alone with his partner August Ritter, in 1871,
they set up the “Mechanical Engineering Workshop” in Mannheim. In the course of their
alliance, Benz realized that Ritter was not a reliable associate and partner. He, therefore,
bought him out using the dowry of his fiancé, Bertha Ringer.
Now, having an establishment of his own firm, he lacked the financial support for his workshop
and was behind schedule as it was, thus he produced iron fittings for the building trade on his
property and called his firm “Metalworking Machine Factory”.
In his course of making a stable income source, the economy had lost its momentum, leading to
stoppage in construction and cancellation of orders. He had to find another way of working
things around. And then it was that he started working on an engine for stationary applications.
This marked a breakthrough in his hard work and the engine was finally patented under a
recognized law in France and Britain.

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Soon, the business flourished and Benz gained appreciation and financial backers. In 1882, the
company name was changed to “Mannheim Gas Engine Factory”, making it a stock company
with Carl Benz holding 5% of stock where he functioned as a director. Soon, Benz moved on to
other ventures where he could seek maximum benefit and appreciation for his work. In 1883,
he set up the firm “Benz & Co. Rheinische Gasmotoren-Fabrik” along with Max Kaspar Rose &
Friendrich Wilhelm Esslinger. Soon the company evolved with 25 employees and were able to
license the manufacturing of gas engines. He now could devote his time and effort into the
production of the vehicle engine. In 1886, he received a patent for his vehicle and the first
“Benz Patent Motor Car” was offered public. There was a growing demand for his vehicles
around which led to expansion of production site in Waldhofstrasse where until 1908
production continued. Another vehicle called the ‘Velo’, a two seater car was introduced by
Benz & Co, a lightweight car and well-priced which led to a huge demand and higher sales units.
At this point, the company had become the world’s leading motor manufacturer.
This historical place led to Carl Benz becoming a very famous and important man in the
automobile industry. The timeline of this historical landmark highlights the progress made by
Carl Benz in achieving the potential of his hard work through the years.

Test track in Untertukheim

Completed over 50 years ago, the test track marked an extensive expansion strategy. The track
is conducted ideally for high-speed testing, endurance and rough-road testing. The testing
possibilities accommodated the range of vehicles produced by the company. Till today, this
track provides an important input in the development of a vehicle.
The product portfolio of Mercedes-Benz AG comprises of saloons, trucks, sports cars and racing
cars, suiting to almost all automotive purposes. During the 1050s, the portfolio was growing,
which posed challenged to the development team. They lacked a test track for their vehicles
which was of a necessity, which was raised by the Board of Management in November 1953. Dr,
Fritz Nallinger, head of Development suggested then that a long stretch of land adjacent to the
Untertukheim plant be set for building a test track. This was called the ‘bottleneck’. In 1957, the
first phase of the operation was initiated. A series of methodologies were implanted for the
testing. This track was used to even test drive concept car which are not made public by the
company but may have fortune in the future.
With accordance to how the roads in Germany were, these tracked were designed in such a
manner that it covered almost all types of terrains. The most extreme tests are done to ensure
the safety of the passengers owning the company vehicles. Since the expansion work was
completed 50 years ago the 8.4-hectare site, with its cumulative 15.5 kilometers of different
test tracks, has continued to be adapted constantly to new conditions. A section of road with a
low-noise "whisper asphalt" surface, for example, was created for the measurement of noise.

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This continual updating of the test track in Untertukheim means that it remains, to this day, an
important development tool for new technologies and vehicle. The historical landmark is still
structured where all Mercedes-Benz vehicles, whether a production vehicle or a concept
vehicle, are all tested on this track.

The Mercedes-Benz Museum

Automobile enthusiasts from around the world visit the Mercedes-Benz Museum. The Museum
covers over 120 years of automobile evolvement, that fascinates its viewers about how the
change in the automotive industry took place. The museum has 3 distinct features which show
the progress and the developments of Mercedes-Benz AG.
the exhibition held at the museum is crowned as the tradition of the company. On 9 different
floors, covering about 16500sq. meters of space, with 160 vehicles and over 1500 exhibits, the
museum provides the visitors a complete different experience. The museum shows the
direction of the automotive industry towards the future and the brand value that Mercedes-
Benz has created around the globe over the years.
The architecture of the museum is of astonishment to most people. The designed unveiled in
the museum indicated a future view of the brand. The interior is designed showing ultimate
concept of originality. The architecture also points towards the company pioneering towards a
vision accident free driving.
Mercedes-Benz AG has a deep historical architecture that makes the strong hold of the
company it has today. Years of hard working and innovation has contributed to the brand value
the company holds today. The founding members worked years for development in the
automotive industry. The successful venture that started in the late 1800s truly shows how
remarkably the company has grown over decades.
VISION AND MISSION STATEMENT

 We invented the automobile- now we are passionately shaping its future. As a pioneer
of automobile engineering, we feel inspired and obliged to continue this proud tradition
with groundbreaking technologies and high-quality products.

 Our philosophy is clear: we give of our best for customers who expect the best- and we
live a culture of excellence that is based on shared values. Our corporate history is full of
innovations and pioneering achievements: they are the foundation and ongoing
stimulus for our claim to leadership in the automotive industry.

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TOP MANAGEMENT TEAM AT MERCEDES-BENZ AG

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 MARKUS SCHAFER BRITTA SEEGER HUBERTUS TROSKA HARALD WILHELM
Memeber of the Board
of Management of Member of the Board of Member of the Board of Member of the Board of
Diamler AG, Group Management of Daimler Management of Daimler Management of Daimler
Research and Mercedes- AG. Mercedes-Benz Cars AG. Greater China. AG. Finance &
Benz Cars chief Marketing & Sales. Controlling/Daimler
Operating Officer. Mobility.
Manager, Sales
initially joined: Customer Organization
joined initially: Trainee Care, Mercedes-Benz AG Overseas/Sales Manager, Mergers &
(International Headquarters, 1992. Companies Overseas, Acquisitions, Daimler-
Management Associate Daimler-Benz AG Benz Aerospace AG,
Program) Bodyshop, Headquarter, 1988 1992.
Daimler-Benz AG, 1990

OLA KÄLLENIUS MARTIN DAUM RENATA JUNGO WILFRIED PORTH

chairman of Board of
Management/Merced
es-Benz Cars.(since
May2019)
Member of the Board of
Management of Daimler
AG and Chairman of the
Board of Management of
Daimler Truck AG
BRÜNGGER
Member of the Board of
Management of Daimler
AG. Integrity and Legal
Affairs.
Member of the Board of
Management of Daimler
AG, Human Resources and
Director of Labor
Relations.

started initially as
Manager, Corporate
Controlling, Mercedes-
Benz U.S. International
Inc., Tuscaloosa (USA),
1995
initially joined: initially joined: Director initially joined: Planning
International Legal Department, Metro Engineer, Central
Management Associate Holding AG (Switzerland), Production Engineering,
Program, Daimler-Benz 1995 Daimler-Benz AG
AG, 1987 Headquarters, 1985

Organizational culture

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At Daimler AG, there is clear focus on one parameter: PEOPLE. The company employs around
298,000 employees from 5 different generations and wide spread across more than 150
nations. The company indulges its employees into creativity and trust-building. There is an open
culture for creativity in the organization, which puts people in diverse work situations that
enables them to come out with the creativity potential in them. Opportunities are given to
employees to work in diverse, interdisciplinary teams, which work hand-on-hand to create
something innovative. Flexible work hours are just another benefit that is given to the
employees that help them work more efficiently, international assignments and individual
personal development opportunities are given to employees to provide them with diverse skills
and a chance to put forward their own ideas. There are various areas of the organizational
culture that are highlighted by the company.
Professional development: to support employees in their professional development, in their
tenure as managers or specialists, the Daimler Corporate Academy offers the employees
personal development programs which shape their careers at the company.
Working globally: Daimler AG offers its employees a chance to work internationally, exploring
new countries, having various lengths of stay in another country and benefiting from leaning
more about the business workings in different countries. Employees sent on international
assignments are never left alone. The company makes sure that employee are taken care of,
which includes their children and family.
Health Management: the company makes sure the health of its employees and their families is
most taken care of. Human resources takes pride in the achievements ovee the years as this is
resulted in contributing to retension of employees.
Careers and family: worklife-balance is essentially put into the course of the employees time at
the company to provide them with necessary skills to decide which role to play whenever
necessary. Female employees are given flexible working hours and maternity leave to provide
them with comfort. They are also given other family related leaves and paid leaves. This
encourages employees to stay with the company and not find work elsewhere.

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REVENUE from sales.
Mercedes-Benz AG offers a wide range of vehicles, both commercial and private. While the
Mercedes-Benz cars are of premium range, the sales figures worldwide show that there is
significant market capture. In 2019, the company showed a sales record €93.877 million in
Mercedes-Benz Cars, which shows that although the company has only a target segment
around the world, they have managed to keep the sales yet high. The company had a 1% hike in
sales figures during the year. The Daimler trucks sales are at € 40.235 million, a 5% increase
from the previous year 2018. Mercedes-Benz vans show sales at €14.801 million, there has
been a staggering 9% increase in the revenue of vans from the previous year. Daimler Buses
show a sales figure of €4.733 million, a 5% increase from the previous year.

PRODUCT RANGES OF MERCEDES-BENZ AG

As mentioned in the beginning, the company deals in a wide range of vehicles, which are of
both commercial and private value. The company has covered mainly in passenger vehicles,
vans, transportation utility vehicles, trucks and also a unit in the financial services. Listed below
are the various products offered by Mercedes-Benz AG across many nations and some globally
Mercedes-Benz EQV: It is the first Mercedes-Benz fully electric MPV (multi-purpose vehicle),
which allows room for larger family and conversion into a vehicle with many purposes with
ample space.
The new Actros: The need for more efficient and safe trucks today due to accidents and safety
reasons, the company has brought forward the world’s first highly sophisticated, semi-
automated truck. The truck offers a touch screen display, with smart technology for pedestrian
safety and more efficiency in fuel consumption.

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Mercedes-Benz Cars: the company offers a wide range of passenger vehicles with the most
sophistic technology developed by the company. Some of the car ranges are the C-class, E-class,
A-class, B-class, S-class, G-class for SUVs, GLC class for SUVs, GLE for SUVs.
Mercedes AMG: AMG stands for. "Aufrecht Melcher Grossaspach" which comes from Hans
Werner Aufrecht (A) and Erhard Melcher (M) who were the two main partners, while Aufrecht's
birthplace of Grossaspach (G) is the third letter in the name of an independent division of
Mercedes-Benz. this is the sports cars that the company produces. The target segments for
these cars are car enthusiasts and people who are looking for performance vehicles.
Mercedes-Maybach: this product segment targets the executive class, state leaders and VIPs,
who want to show a sign of luxury, comfort and performance. Most of these vehicles are highly
customized by their clients which could include bulletproof shielding, extra security for people
who need it. The Maybach series shows true luxury and stands as the most preferred vehicles
by the high class society.
Smart: this is an entirely new concept developed by the company to serve a segment of the
market that needs smaller electric cars, comforting 2-4 passengers. The SMART line of cars
produced are in partnership with SMART, a company that produces compact cars that run on
electric power. It is an initiative for moving towards a greener planet.
Mercedes-Benz Trucks: the company offers a range of trucks for commercial purposes around
the globe. Comparatively, the trucks have a higher cost of purchase, but the efficiency and last
makes it preferred by its buyers.
Freightliner: Freightliner Trucks is an American truck manufacturer. Founded in 1929 as the
truck-manufacturing division of Consolidated Freightways, the company was established in
1942 as Freightliner Corporation. Owned by Daimler AG since 1981, Freightliner is a part of
Daimler subsidiary Daimler Trucks North America.
Fuso: The leading manufacturer of trucks in Asia. The Mitsubishi Fuso Truck and Bus
Corporation is a manufacturer of trucks and buses. It is headquartered in Kawasaki, Kanagawa,
Japan. Currently, it is 89.29 %-owned by Germany-based Daimler AG, under the Daimler Trucks
division. 
Western Star: leading premium trucks manufacturer in North America. Western Star Trucks
Sales, Inc., commonly designated Western Star, is an American truck manufacturer
headquartered in Portland, Oregon, United States, and a subsidiary of Daimler Trucks North
America, in turn a wholly owned subsidiary of the German Daimler AG.
BharatBenz trucks & buses: BharatBenz is a brand of Daimler India Commercial Vehicles, itself a
wholly owned subsidiary of the German manufacturer Daimler AG. The brand is known for its
trucks and buses. The headquarters of BharatBenz is at Oragadam, Chennai, India. The “Bharat”
part is symbolic for India.

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Mercedes-Benz Vans & Camper Vans: Mercedes-Benz vans are used both for private and
commercial uses. The vans provide a series of features distinguished from other brands, being
efficient, more comforting and providing a different drive experience. For those camping
enthusiasts, the Mercedes-Benz camper vans fulfill all their needs.
Mercedes-Benz Coaches & Buses: companies take want to take their assets to a level of
standardization use the Mercedes-Benz buses and coaches. It is a sign of standards demanded
by their customers. The companies offer a wide range of buses, of short, medium and long
hauls.
Setra Buses: Mercedes-Benz produces a premium range of buses, which are have more built in
features and provide luxurious travel comfort and amenities. Setra is a German bus division
of EvoBus GmbH, itself a wholly owned subsidiary of Daimler AG.

Thomas Built Buses: Thomas Built Buses, Inc. is an American bus manufacturer. Best known for
its production of yellow school buses, Thomas produces other bus designs for a variety of
usages; currently, its production is concentrated on school buses and activity buses and their
commercial derivatives.
Daimler Mobility: Daimler Mobility AG is the global financial and mobility services provider of
Daimler AG. The company finances, leases and insures Daimler Group passenger cars and
commercial vehicles, optimizes fleets of commercial customers and offers banking and
credit/debit cards services in more than 40 countries.

Marketing mix of Mercedes-Benz

according to “Business Week Magazine” (feb2019), Mercedes-Benz is the top most recognized
global automobile brands. The success of the brand is not incidental, but hard work
collaborated by several people in shaping the brand-image as it is today. Crowned as the oldest
Luxury Car producer and its reputation is still rising. In the highly competitive automobile
industry, the company has proved its marketing and promotional strategies to make them
stand out as a leader in the industry.
Product: it has already been mentioned several times earlier, the company produces a wide
range of automobiles from passenger cars, buses, vans, trucks and coaches, with manufacturing
facilities spread across the world. The company origin traces back to 1901, when the first car
was marketed. Since then, the company has introduced a large number of innovative products.
In the Indian Context, product remains the strongest P of the marketing mix making the brand a
leader in the Indian market for over 50 years. The current models assembled are- C-class, E-
class, S-class, ML-class, while the other models include GL-class, CLS-class, SLK-class which are
completely imported.

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Promotion: it is known that Mercedes-Benz products focus on luxury, comfort, and innovative
engineering, but intense competition has made the company adjust their products according to
the changing consumer preferences. Now, the promotion tactics focus more on an energetic,
loving and appreciable side of Mercedes Benz. With evolution of the marketing strategy of the
company, it became necessary to cut down prices for certain products in order to cater needs
of young buyers, who are looking for a slightly cheaper car.
In order to engage with consumers in a technology driven environment, the company focus of
promotion is done via online adverts, tele-marketing, social media sites like Facebook, twitter &
Instagram. Another excellent way of retaining customers is providing the best services at point
of sale. In this way, customers are highly satisfied with the services and would engage in future
troubles. Warranties provided by the company do have certain limitations, but customers do
want it. Warranties allow customers to visit the service centers for repairs & replacements. One
appreciation Mercedes-Benz has received is their reputation in exclusivity and quality in all its
products, making it a sign of standard.
Place: Mercedes-Benz distributes their products through a wide network of distributors across
many countries. The company, over years, has introduced many technological innovations
which provide safety, comfort and class to the users. The cars produced are not made to get
from point A to point B. the cars are designed in such a manner that will enable them easily to
sell the idea about the car in the focused market segment. The German manufacturer has
production sites in locations where they can easily access the raw materials, cluster their
suppliers in a way that they can cut down costs. The company, over the years has achieved
great heights due to the expansion of the brand through increasing production.
Price: according to reports on the prices of Mercedes-Benz cars, the starting range of a typical
Mercedes-Benz car in India is INR21,49,000 and goes up to INR7,68,00,000 for the top range
cars, meant for the 1% population who can afford these. The price structure apart from India
for a typical car produced by the company would range from $30,000 to $100,000, depending
on which car model is purchased. The prices of luxury cars are meant to be higher as the people
who buy them want the particular facilities, technology and class that comes with owning a
Mercedes-Benz. In a country like India, the prices of Mercedes-Benz cars are affordable by
those from rich families, medium-large business owners, top company executives, etc.

MERCEDES-BENZ FIVE FORCES ANALYSIS

amongst one of the most celebrated brands of premium and luxury class automobiles,
Mercedes-Benz has enjoyed the privilege of a high level of brand awareness that covers a large
portion of the world. Among stylish design and comfort, the company also produces vehicles
which carry innovative technology and best-performance. Under changing business conditions
and dynamics of the economy, the company produces cars that match the trends running in the
market. The automobile industry, in general has faced a transition that has disrupted the sales
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of many brands. Some of the changes are reshaping of regulations and policies, high demand
for electric mobility and increase in demand for SUVs around the world. To tackle such hurdles,
Mercedes-Benz has put forward a range of EVs, which has promised them a strong source of
revenue generation. The company has been ready for growth in a much faster pace, but due to
the coronavirus(COVID-19) outbreak, results have declined. The PORTERS 5 FORCES analysis will
help us understand better of how the dynamics of the company runs in each component of the
analysis.
Bargaining power of suppliers
The suppliers of Mercedes-Benz hold very low bargaining power. The suppliers are scattered
from China to Brazil and are mostly small businesses. The main reasons by they hold less
bargaining power is due to fragmentation and lack of forward integration. Most of these
companies are dependent of Mercedes-Benz as a source of revenue. Without big companies
like Mercedes-Benz, these companies would lose their position. In case of Mercedes-Benz, they
hold high bargaining power over their suppliers and thry also frame the procurement rules and
policies. The suppliers are required to be compliant as per the regulations put forward by
Daimler AG locally.
Bargaining power of buyers
Over the years, with changes in the market dynamics and continual change in the working of
the automobile industry, customers have a moderately higher bargaining power. The focus of
the company is on the driving experience of their customers, tackling with high competition,
automatically customers get a higher bargaining power over the company. Individual buyers
may not have much impact in bargaining power, but it must be remembered, a single purchase
is also quite high. While buyers who purchase a fleet of vehicles would significantly have a
higher bargaining power. Over and above, the customers as a whole have a high bargaining
power as every company wants to create a brand-image in order to popularize their brand.
Competition has also led to companies being focused on customer engagement and retaining.
Threat of substitutes
Threat of substitutes would mean the customers moving to another brand. In the automobile
industry, competition plays a significant role in their survival in the market. A large number of
luxury, premium brands are available in the market. Some of the companies like AUDI and
BMW are the biggest rivals of Mercedes-Benz as they have a similar portfolio of products.
Companies like TESLA and LAMBORGHINI as they diversify their product portfolio. Some of the
vehicles produced by Toyota and General Motors have also proven rivalry to Mercedes-Benz.
Apart from competition, substitutes like public transport, car-pooling, share cabs have become
a rising threat. Mercedes-Benz has created a good reputation in terms of popularity and superb
driving experience, which has helped the company maintain its demand and minimize threat
from substitutes. Since Mercedes-Benz produces high end cars, a limitation to threat from

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substitutes comes from switching costs. Normally, the cost of purchasing is very high and
switching would add to additional costs and loss.
Threat of new entrants
Entry of a new player in the automobile industry is a rare possibility. Companies like Mercedes-
Benz have existed in the market for over decades and it has taken them time to cover such a
market share, with high brand popularity and risky investments. In order to become a
recognized player, the new entrant will have to invest a colossal amount of money, comply with
regulations of the country and overcome the operational barriers that follow. Moreover,
competition in this industry is already so high. Aggressive competitive environment exists
amongst the players as every player aims at creating a unique brand image, brand popularity
and other sources of achieving competitive advantage. Therefore, overall, the threat to
Mercedes-Benz from entry of new players is absolutely Minimum.
Industry rivalry
as mentioned in the previous sections, the automobile industry has intense rivalry. It is one of
the industries that sees a large amount of competition. Moreover, the companies also invest
high in R&D activities, product innovation and largely on marketing objectives. All this
investment is done primarily to tackle competition and adhere to customer expectations. The
competitive position of Mercedes-Benz has been secured in terms of their brand-image,
marketing, customer loyalty and R&D. this has been possible due to timely decisions of the
executives of the company. Although, overall, there exists high competitive rivalry in the
industry.

COMPETITORS ANALYSIS
Mercedes-Benz, being a maker of high end luxury and sports cars has wide scope of
competition from various players competing in the same market segment. In this segment of
the market, the makers are compared with the performance and features of the vehicles.
Mercedes-Benz is proudly one of three big German Luxury automakers. The competitors are as
follows:
1.) Audi: The German automaker is a part of Volkswagen Group, with production units set
across worldwide. The company produces the finest SUVs, Supercars, Sports cars,
Passenger vehicles. The brand is known for the accuracy and engineering capabilities of
their cars, which is in demand of in the market. The unique Cars produces by the
company use high capacity engines, with almost the same look in each car. The product
ranges from premium cars to super-premium and to ultra-premium. The almost similar
performing vehicles make Audi a competitor to Mercedes-Benz.
2.) BMW: Bayerische Motoren Werke (BMW), a multinational corporation, headquartered
in Munich, Germany is production of vehicles set across worldwide. The company
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 produces high performance motorcycles and cars. The BMW M models are the
performance vehicles produced by the company while BMW I stand for the electric
vehicles produced. The brand concentrates on continuous process improvement and
advancement in technological fronts. The various product ranges of the brand, the
reliability and the quality make it one of the top competitors of Mercedes-Benz.
3.) Porsche: another German Automobile Manufacturer, Porsche is famous for its sedans,
SUVs and performance cars. In the area of innovation, numerous Porsche Hybrid cars
are produced. Not only that, the company has installed their very own Porsche Charging
Station with 350KW, 800V, making it the fastest charging station. Porsche, like
Mercedes-Benz has a long history of Luxury Vehicles produced. The customers of
Porsches are usually high end buyers who want only the best. Due to the quality of
inputs used, the price range and competitive nature in races, the company remains one
of the top competitors of Mercedes-Benz.
4.) Lamborghini: An Italian performance vehicle producer, and another corporation under
the Volkswagen Group, the company poses competition in the SUV and High
Performance cars segments. The company recently introduced their first SUV, the URUS.
This has posed competition to Mercedes-Benz as URUS has proved to be preferred for
all its unique features such as speed, comfort and reliability.
5.) Bugatti: A well-known French car manufacturing company, Bugatti was founded in the
year 1909. Bugatti cars are popular for the beauty seen in their designs. Bugatti designs
manufacture and markets various luxury automobiles. This company provides a great
selection of high-end luxury vehicles, especially in the sports car. The brand competes
with Mercedes-Benz in terms of design and exclusivity.

IMPACT OF CORONAVIRUS (COVID-19)

As the COVID-19 pandemic broke out in China toward the start of the year, vulnerabilities in the
worldwide car SUPPLY chain were uncovered with almost 85% of the world's provisions subject
to China here and there or another. The expanding influence was felt comprehensively, and
most automobile Manufacturing went to an abrupt stop as lockdowns shut plants.
Indeed, even before the pandemic, the industry was focused on monetarily from expanded
discharges related redesign costs and expanded R&D interests in developing innovations. As
assembling activities continue, the additional weight of COVID-19 security convention
consistence, diving request, and wasteful aspects from underutilized limit are further
uncovering OEMS and providers to extreme liquidity issues. Further disturbances are probably
going to keep, carrying the chance of significant results to explicit portions of the auto biological
system.
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Most regions stay helpless, and Counterpoint expects considerable volume drops in 2020. For
instance, in the significant markets of North America and Europe, we expect base case deals of
13.4m and 13.6m, a YoY decrease of 24.1 % and 25.7%, respectively.
Mercedes-Benz AG is under the larger part Daimler AG group. According to reports, the parent
company has suspended their production sites, and has managed to convert some of their
resources to battle to ongoing worldwide pandemic. The following are some of the measures
they have taken:

 Preparing their 3-D printers to be used for production of medical equipment.

 Formula-One team developing and producing breathing aids.
 Deployment of social services in the city of Stuttgart, Germany.
 A temporary hospital funded in India with 1500 beds.
 Donations done in cash and in kind.
In order to fight the pandemic, and ensure safety, the company has allowed most of their
administrative staff to work-from-home. This ensures that they are safe and the company can
function at least in the administrative areas. The BOD has als stated that the factory sites and
offices will all open are the situation has come to a somewhat neutral state where employees
can be physically present.

3 PROBLEM AREAS FACED BY MERCEDES-BENZ AG

 Declining sales of sports cars: car enthusiasts once bought sports cars, with powerful
engines, but today the trend has shifted to buying cleaner fuel based vehicles. The SL &
SLK model sales have been declining which requires them to concentrate on the
production of EVs.
 Increasing cost of sedans: the modern sedans Mercedes-Benz produces does fit into the
buyers segment the company targets. But, for example, in a country like India, where
competition already exists, and the market is highly price sensitive. Here, if the company
could reduce the prices by a small margin, the demand is highly affected. Same concept
could be applied to global demand as well.
 Increasing competition in EV segment: Companies like Tesla, Audi, BMW, have all
succeeded in the EV segment with tesla presenting one of the best cars in the segment.
Mercedes-Benz is currently working on their development of the perfect electric
vehicles. Currently, the company has a division, producing electric vans and trucks too.

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Financials of Mercedes-Benz AG

presented above is the statement of income published on the Daimler AG group website
indicating the revenue generation and expenses incurred by the company during 2018 & 2019.
The statement shows a lower profit to shareholders. This is largely due to increase in operating
expenses that have substantially increased over the financial year. Moreover, operating income
has increased by a positive rate, which would be appreciated by shareholders.

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Presented above is the net operating profit of Daimler Group, indicating the profits attained
from various divisions of the group. Firstly, Mercedes-Benz Cars, which show a negative change
of 53% from the previous year which was caused due to various reasons. Firstly, a disruption in
oil prices caused a fall in demand of passenger vehicles, the trend of electric vehicles and hybrid
technology, are two of the most affecting reasons. To tackle this, the company joined hands
with smart, and also started production of EVs to match the demand in the market.
The profit before tax is highly affected in the company due to the change in sales in cars and
vans. The end result shows a fall of 61% in the operating profit of the company. Further, in the
first quarter of 2020, the sales figures have also been disrupted highly due to the outbreak of
coronavirus (COVID-19). Gradually, as the global scenario comes to normal, the sales figures are
likely to rise.

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References:
https://www.daimler.com/company/business-units/mercedes-benz-cars/
https://www.daimler.com/company/corporate-governance/board-of-management/
https://www.autoevolution.com/mercedes-benz/
https://www.daimler.com/company/tradition/museums-historical-sites/carl-benz-
workshop.html
https://www.daimler.com/company/tradition/museums-historical-sites/50-jahre-einfahrbahn-
untertuerkheimspecial-topic-article.html
https://www.daimler.com/investors/share/outlook/

https://www.daimler-mobility.com/en/company/news/statement-franz-reiner-covid19/

https://jarretlevine.wordpress.com/2017/04/25/chapter-16-organizational-culture/

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