Yiche Research Institute: Mercedes-Benz User Insight Report (2023 Edition)

The reason why Mercedes-Benz has been favored by Chinese women and has become the fulcrum of its destiny is, first of all, that the overall environment is very good. From 2006 to 2010, the sales volume of the Chinese auto market exceeded 10 million, surpassing the United States to become the world's largest auto market. At that time, most families in the Chinese auto market were buying cars for the first time, mainly men, and very few women. From 2015 to 2017, the sales volume of the Chinese auto market exceeded 20 million, and a small number of families began to buy cars for the second or even third time, which helped women to accelerate their influx into the Chinese auto market. The sales contribution in 2018 exceeded 30%, and exceeded 36% in 2022; secondly, the high-end auto market where Mercedes-Benz is located is the focus of female consumption, because men buy cars at the time of marriage, and young men in their twenties originally had low incomes. After getting married and buying a house, they almost emptied their family funds, so they just had to make do with a car. Women usually buy cars 10 years later, when the family mortgage is almost paid off and most husbands and wives are at the peak of their careers. Naturally, wives cannot afford to buy cars as cheaply as their husbands did 10 years ago. They need to buy cars of higher quality. In addition, Mercedes-Benz is a model of luxury cars, which is more upscale and easier to be chosen. Finally, Mercedes-Benz has made efforts to take the lead in formulating a women's strategy, optimizing design and services, etc., which makes it easier to attract women.

Mercedes-Benz's prediction of opportunities for women and its specific implementation of women's strategies are very worthy of learning and reference by other auto companies. First, opportunities for women are still being released, accelerating the penetration from the high-end car market to other fields. Second, the strategic thinking of discovering new opportunities and the system architecture of executing strategies can be replicated to other new opportunities besides women. Third, new segmented opportunities in the Chinese auto market are emerging in an endless stream.

From 2020 to 2022, China's new energy vehicle market has emerged as a new force, with terminal sales soaring from more than 1 million vehicles to more than 5 million vehicles. The core driving force is female users, and their sales contribution has increased from 40% to nearly 70%;

From 2020 to 2022, with the sudden rise of the female-dominated new energy vehicle market, the proportion of new energy vehicles in female sales will increase from less than 10% to nearly 50%, becoming the "new favorite" of Chinese women;

Chinese women have their own distinctive characteristics when purchasing new energy vehicles: among the top five reasons why women choose new energy vehicles in 2022, transportation is the most prominent, followed by commuting to work, which is very different from the main reasons for buying cars, which are mainly commuting to get off work and self-driving travel; among the top five concerns of women in purchasing new energy vehicles in 2022, styling is the most prominent, followed by price, which is very different from the main concerns of the market, such as brand and safety.

In 2020-2021, Tesla quickly produced model 3 and model Y in China. Compared with model S and model X, the former two are lower-level and more affordable, which can better meet the needs of transportation and attract female users. In 2022, transportation is the first reason for buying Tesla, accounting for 47.72%, and women are the first users of Tesla, accounting for 56.07%;

In 2021-2022, BYD successively produced domestic pure electric products Dolphin and Yuan Plus. Compared with Qin EV, Song EV, Tang EV, etc., the former two are lower in level and more exquisite in design, which can better meet the demand for transportation and attract female users. In 2022, transportation is the first reason for buying BYD BEV products, accounting for 45.77%, and women are the first users of BYD BEV products, accounting for 50.23%;

From 2020 to 2022, as women's car purchase focus quickly shifted to new energy, and the localized consumption characteristics of styling, cost-effectiveness and focusing on transportation were rapidly highlighted, BYD BEV, Tesla and others were the first to benefit. The former's terminal sales in China soared from 103,400 to 789,100, and the latter's sales soared from 45,400 to 441,700, forming a sharp contrast with the stagnation of Mercedes-Benz sales growth in the past three years.

Mercedes-Benz's new energy strategy in China is very different from that of BYD BEV and Tesla, which have benefited from China's new energy wave first: the design of the latter two electric vehicles tries to highlight the difference from fuel vehicles, while Mercedes-Benz's is more homogeneous; the comprehensive cost of the latter two is lower than that of fuel vehicles of the same level, while Mercedes-Benz's is higher than that of fuel vehicles...

Mercedes-Benz's new energy strategy in China highlights five characteristics: equal replacement for fuel vehicles, family-oriented design, higher pricing than fuel vehicles, comprehensive scenarios and male thinking. China's actual new energy consumption demands also have five characteristics: more fashionable, more economical, focused on transportation scenarios, complementary to fuel vehicles, and dominated by women.

Mercedes-Benz's new energy thinking conflicts significantly with China's actual consumption characteristics, resulting in Mercedes-Benz's new energy products starting early but arriving late in China. In 2017, it actively tested the new energy vehicle market, but sales have not improved. As of 2022, it was only 5.4%, and Mercedes-Benz encountered a growth bottleneck in China. From 2020 to 2022, it has never been able to break through 800,000 units.

From 2020 to 2022, Mercedes-Benz's terminal sales in China stagnated, frustrated by 800,000 vehicles. The core problem is that its new energy strategy does not conform to the localized electrification trend of Chinese women. In 2022, the contribution of new energy to terminal sales in China's passenger car market doubled to 25.60%, while Mercedes-Benz only accounted for 5.4%. From 2023 to 2026, the proportion of new energy in China's auto market is very likely to exceed 50%. If Mercedes-Benz continues to mechanically introduce the global new energy strategy during this period, it is possible that its sales in China will decline sharply.

It is urgent for Mercedes-Benz to optimize its new energy strategy in China, and the top priority is to attract women. In terms of capturing opportunities in the wave of electrification among women, the Smart electric vehicle project jointly developed by Mercedes-Benz and Geely is getting better. Deliveries will begin in the second half of 2022. With just the Smart Elf 1, Smart terminal sales will surpass the total sales of all Mercedes-Benz electric vehicles in China. In the fourth quarter of 2022, more than 80% of the potential users of Smart Elf 1 were women, and nearly 80% of female users were highly educated. At the end of 2023, the more elegantly designed compact SUV Elf 3 will be launched to continue capturing new opportunities in the wave of electrification among Chinese women;

The core logic of Mercedes-Benz's new energy strategy is electrification, which greatly reduces the investment in fuel and hybrid resources. However, the world's largest new energy vehicle market in China is mainly driven by women, which makes the Mercedes-Benz brand in a dilemma: if it fully competes in the wave of electrification of Chinese women, Mercedes-Benz's established new energy strategy will almost have to be overturned. If it continues to promote the established new energy strategy, its sales in China are likely to decline sharply.

Mercedes-Benz launched its women's strategy in 2015 with the intention of increasing the proportion of female users. For example, the contribution of women in the Chinese auto market was less than 30% before, but 35-40% would be enough. Who would have thought that Chinese women's "favor" for Mercedes-Benz would be unstoppable, and the sales contribution soon exceeded 50%, rising to 60%. In 2022, the proportion of women in Mercedes-Benz pre-order users reached 66.81%.

Although women are quickly becoming the "pillars" of Mercedes-Benz, two-thirds of the current sales of passenger cars in China still come from men. In 2021-2022, female users will quickly rise to a trend of electrification consumption with local characteristics, which not only caught Mercedes-Benz, which holds high the global new energy strategy, off guard, but also made Mercedes-Benz increasingly non-mainstream;

At a time when Mercedes-Benz is unable to effectively seize the wave of female electrification, the serious imbalance in gender strategies will make things worse.

Although the proportion of male Mercedes-Benz owners is decreasing, the opportunities for males in the Chinese auto market are continuously being released and are becoming more and more high-quality. In the past decade or so, young men who had low incomes but bought cars mainly for marriage are now transforming into middle-aged men with more wealth and stronger car-buying capabilities.

From 2020 to 2022, the uncle car market in big cities, one of the uncle car market segments, showed explosive growth, with terminal sales rising from 1.79 million to 2.85 million. BMW X5, Ideal L9, Senna, and Denza D9, which are mainly for uncles in big cities, benefited from this and attracted many old Mercedes-Benz users. In 2022, the replacement purchase demands of old users of Mercedes-Benz main-selling models such as A-Class, C-Class, E-Class, GLA, GLB, and GLC showed five major characteristics: transportation, energy saving, family, personality, and high-end. Among them, transportation is mainly for women, but there are many male users in family, high-end, energy saving, and personality, and men are even the absolute majority.

The big boss of a company driving a car with a tiger logo was originally a vivid portrayal of Chinese society. In 2021-2022, the contribution of wealthy entrepreneurs and powerful civil servants to Mercedes-Benz sales has decreased, and the pre-order data for 2022 has further shown a downward trend; the dramatic user evolution has quickly reshaped the Mercedes-Benz value system: exquisiteness, elegance, etc. were mentioned first, which is closely related to the high proportion of women; the rapid decrease in the number of men has quickly weakened the labels of family, stability, responsibility, etc., which have been quickly taken over by competitors such as Ideal;

In recent years, although Mercedes-Benz's top-level strategy is ALL IN electrification and intelligence, its brand labels such as technology, intelligence, and innovation are not prominent, far inferior to competitors such as Tesla.

Women's happiness comes too suddenly, while men's troubles come too unexpectedly, which makes Mercedes-Benz's brand building embarrassing.

From 2017 to 2022, urbanization and other factors will help China's auto market consumption focus shift from third-tier and lower small cities to first-tier, new first-tier, and second-tier large cities, with the first-tier cities of Beijing, Shanghai, Guangzhou, and Shenzhen being the most significant. However, Mercedes-Benz has shifted from large cities to small cities, with its share in first-tier cities falling from 20.49% to 15.45%;

Beijing, Shanghai, Guangzhou and Shenzhen all have purchase restrictions, and new energy vehicles account for a higher proportion, with Tesla, BYD and others benefiting first. Due to purchase restrictions, car buyers in Beijing, Shanghai, Guangzhou and Shenzhen are older and there are many uncles, so family-oriented products such as Ideal L9 and Denza D9 benefit first. Since Mercedes-Benz electric vehicles do not meet localization demands and there is a lack of uncle products, the first-tier market share has decreased by a quarter in the past five or six years;

Beijing, Shanghai, Guangzhou and Shenzhen are strategic high grounds for China's auto market. The reduction in market share will indirectly reduce Mercedes-Benz's brand power.

If female users can continue to boost Mercedes-Benz sales in China, the hidden dangers of the imbalance in gender strategy will be hidden;

From 2020 to 2022, Mercedes-Benz's sales and the proportion of women both stagnated, which was like an early warning signal, reminding Mercedes-Benz that it was time to comprehensively reflect on and actively optimize the challenges of the imbalance in gender strategies;

Challenges derived from the strategic imbalance between men and women are gradually emerging, causing Mercedes-Benz to miss new opportunities for uncles, and losing high-quality users such as middle and senior corporate executives and civil servants, reducing its market share in first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen, and making the core value of the Mercedes-Benz brand increasingly blurred. If there are no timely and effective optimization measures in the future, Mercedes-Benz is likely to see a decline in sales in China from 2023 to 2026.

From 2023 to 2026, as the population of Generation Z (1995-2009) continues to decrease and accelerates its influx into the used car market, and Generation Y (1980-1994) accelerates its replacement purchases, it is predicted that the middle-aged will fully dominate the Chinese car market, accounting for nearly 60%; as the phenomenon of singles intensifies and car purchases by women in families rise, it is predicted that the proportion of women is expected to approach 40%;

Uncles and women will become new growth points in China's auto market. Competitive brands such as BYD, Ideal, and Tesla are actively making plans: Ideal Auto has clearly stated that it will focus on the price range of more than 200,000 yuan, and has sorted out two clear product lines, SUV and MPV, in order to cultivate the uncle car market; after fully completing the new energy transformation, BYD's multi-brand strategy has surfaced, highlighting its high-end characteristics...

At present, Mercedes-Benz's old users are showing strong demands for transportation, family, energy saving, personality, and high-end, and Mercedes-Benz's existing products cannot effectively meet them. In addition, competitors such as Ideal, BYD, and Tesla are actively deploying and can attract many Mercedes-Benz's old users. This is equivalent to forcing Mercedes-Benz into a dilemma of "wolves in front and tigers behind". Mercedes-Benz does not have much time left.

In the past six or seven years, although the contribution of "Chinese women" to Mercedes-Benz's sales has continued to increase, from the perspective of product structure, Mercedes-Benz's care for "Chinese women" is relatively limited. From 2017 to 2022, the internal structure of Mercedes-Benz's products sold in China, such as price range, level, and energy, has only slightly changed or remained unchanged;

Six or seven years later, old users such as "Chinese women" who have continued to contribute to the sales of Mercedes-Benz have also begun to increase their replacement purchases, and then some of them voted with their feet. From 2020 to 2022, Mercedes-Benz brand intention loyalty dropped sharply from 31.55% to 21.39%. From 2023 to 2026, if Mercedes-Benz still cannot effectively retain old users such as "Chinese women", the impact on Mercedes-Benz's sales in China will continue to be apparent;

Mercedes-Benz has done little in the past, so it will have to make up for it. Not only does it have little time left, but it also has a long way to go to adjust.

Since 2015, Mercedes-Benz's women's strategy has achieved great success in China. "Chinese women" have helped Mercedes-Benz's sales in China soar, surpassing BMW and Audi, and making China the world's largest car market for Mercedes-Benz.

From 2020 to 2022, "Chinese women" quickly set off a wave of electrified consumption with local characteristics, and opportunities for "Chinese uncles" were quickly released. However, Mercedes-Benz's new energy strategy lacked local characteristics and lacked care for "Chinese uncles", which quickly exposed the hidden danger of Mercedes-Benz's "serious imbalance in gender strategy", resulting in stagnation in sales growth in China and affecting global performance, and the emergence of new strong competitors;

The stagnation of growth from 2020 to 2022 has sent a timely warning signal to Mercedes-Benz. From 2023 to 2026, the continued increase in the proportion of middle-aged people and women in the Chinese auto market will make Mercedes-Benz face more severe challenges;

Yiche Research Institute recommends that Mercedes-Benz actively formulate an "uncle strategy" and actively promote the research and development of localized products such as family cars and hybrid energy-saving cars by cooperating with the advantageous resources of existing stakeholders such as BYD and Geely, and comprehensively plan a new round of domestic projects focusing on personalized categories such as hard-core and sports cars and high-end products such as medium and large and large, so as to wholeheartedly protect "Chinese uncles". At the same time, comprehensively deepen the electrification cooperation project with Geely, in addition to enhancing the strategic weight of Smart, accelerate the electrification process of Mercedes-Benz's compact and lower entry-level products, focus on competing in the commuter car market and consolidating the female car market;

By actively consolidating the achievements of women and making every effort to capture the opportunities of uncles, we hope that Mercedes-Benz can reconstruct a new competitive system of "new strategic balance between men and women" at the fastest speed and minimum cost, and continue to play a leading role in the "new high-end era".

The "middle-aged wave" in China's auto market has continuously spawned more segmented demands such as transportation, energy saving, family, and personality, helping the high-priced auto market enter the "new high-end era";

From 2020 to 2022, the stagnation of Mercedes-Benz's sales growth in China is not an isolated case or accidental event. Traditional high-end brands such as BMW, Audi, Cadillac, Volvo, and Lexus have all encountered stagnation in sales growth. In 2022, most of the sales of the above brands in China came from "Chinese women", but their new energy strategies are almost unanimous in being unable to meet the demands of "Chinese women" for localized characteristics, and their existing products generally lack the charm to attract "Chinese uncles";

From 2023 to 2026, the "middle-aged" trend in the Chinese auto market will continue to strengthen the "high-end auto market". It is urgent for overseas high-end brands such as Mercedes-Benz, BMW, Audi, Cadillac, Volvo, and Lincoln to optimize their strategies in China. Caring more for "Chinese uncles" will become the new mission of many overseas high-end brands, but "Chinese uncles" are not easy to fool. Are you mentally prepared?