ANALYSIS OF MERCEDES-BENZ AND BMW COMPETITORS IN THE RUSSIAN CAR MARKET

ANALYSIS OF MERCEDES-BENZ AND BMW COMPETITORS IN THE RUSSIAN CAR MARKET

Tamara Chesnokova

Master's student, Plekhanov Russian University of Economics,

Russia, Krasnodar

ABSTRACT

The article analyzes the dynamics of sales of Mercedes-Benz and BMW in the Russian passenger car market. Based on the results of the calculations, a conclusion was formed about a fairly high competition between the analyzed automakers, nevertheless, in the medium term, the positions of Mercedes-Benz seem to the author more promising.

Keywords: Mercedes-Benz, BMW, competition, automakers, sales dynamics.

Mercedes-Benz, BMW, Audi and Volkswagen are four German car giants that occupy leading positions in the global automotive market. However, of these, only Mercedes-Benz, Audi and BMW compete in the segment of luxury cars. The purpose of this article is to investigate the dynamics of sales of Mercedes-Benz and BMW cars in the Russian passenger car market. The information basis of the study is the materials of the Russian portal https://auto.vercity.ru .

The history of the rivalry between the two German manufacturers is quite long. Thus, the founding date of BMW is March 7, 1916 [2], Mercedes-Benz was founded 10 years later - June 28, 1926 through the merger of two companies Daimler and Benz [1]. The cars of both companies are widely known to the Russian motorist and are highly popular.

Figure 1 illustrates the dynamics of sales by Mercedes-Benz and BMW of their cars on the Russian Federation market for the period 2010-2021.

As you can see, the peak of sales of Mercedes-Benz in Russia is in 2014 – 60,185 thousand cars, and at least - in 2010 - 21,848 thousand cars. BMW also has a minimum of sales in 2010 – 20,584 thousand cars, while the maximum is fixed in 2020 - 42,721 thousand cars.

At the same time, the peak of total car sales in Russia occurred in 2012, after which sales declined for four consecutive years: by 5.36% in 2013, by 10.29% in 2014, by 35.72% in 2015 and by 10.97% in 2016.

At the end of  2016, 1.426 million cars were sold in Russia, which accounted for 75.1% of 2010 sales and 48.6% of 2012 sales.

Figure 1. Dynamics of sales of Mercedes-Benz and BMW in the Russian market for 2010-2021

Source: built by the author according to [4]

Note: the data for 2021 are for January-October

The market recovered somewhat in 2017-2018, showing an increase of 11.92% and 12.84%, respectively, but in 2019-2020 sales began to decline again: by 2.28% in 2019 and by 9.13% in 2020. By the end of 2020, almost 1.6 million cars were sold in Russia, which corresponds to the sales volume of 2015 and is 84.2% of the market volume in 2010. Thus, the car sales market in the Russian Federation is characterized by a tendency to reduce the sale of cars.

Figure 2 shows the dynamics of the chain growth rates of sales of Mercedes-Benz and BMW in the Russian market for 2010-2021.

As Figure 2 shows, sales of both firms grew in the period 2011 - 2013. The average sales growth rate for Mercedes-Benz during this period was 31.45%, and for BMW - 26.91%. In 2014, Mercedes-Benz increased sales by 21.28% (from 49,623 to 60,185 thousand cars), reaching, as stated above, the peak of sales for the entire period of the study, while BMW sales, on the contrary, decreased: from 42,071 to 35,504 thousand cars.

Figure 2. Dynamics of chain sales growth rates of Mercedes-Benz and BMW in the Russian market for 2010-2021

Source: built by the author according to [4]

The results of dynamic analysis within the most important subperiods are grouped in Table 1.

Table 1.

Average dynamics of sales of Mercedes-Benz and BMW in the Russian market for 2010-2021

Source: built by the author according to [4]

For the period 2014 – 2017, both car giants showed negative sales dynamics. Thus, the average rate of decline in sales at Mercedes-Benz during this period was 10.39%, while sales at BMW on average decreased by 5.44%. Over the period 2017-2020, the average rate of sales decline at Mercedes–Benz slowed to 2.22%, while its competitors from BMW, on the contrary, increased sales by an average of 12.48% per year.

As a result, by the end of  2020, BMW sales (42,721 thousand cars) in the Russian Federation exceeded sales of Mercedes-Benz (40,491 thousand cars), and this is the first time in the period 2010-2020 when Mercedes-Benz finished after its competitor. In general, it can be concluded that both German manufacturers occupy almost identical positions in terms of sales volume, therefore, in the future we can expect increased competition between companies, from which the end consumer of automotive products will benefit.

If we consider the average figures (Table 2) for the entire period under review, the average sales volume of Mercedes-Benz was 42087 cars per year, while the same indicator for BMW: 33653 cars.

Table 2.

Indicators of variation in sales of Mercedes-Benz and BMW in the Russian market for 2010-2021

Source: built by the author according to [4]

At the same time, BMW's coefficient of variation is lower than that of Mercedes-Benz and on average in the Russian market, i.e. BMW's sales stability is higher than that of its competitor.

It is worth noting the fact that if BMW products were assembled at the Kaliningrad Avtotor plant since 1999 (large-node and small-node assembly), then a fully functional Mercedes-Benz plant for 1000 jobs earned only 20 years later – in 2019. That is, it can be assumed that having lost the leadership in 2020, Mercedes-Benz has created sufficient conditions for its return. Moreover, not so long ago BMW was hatching plans to build its own plant in Russia, but a Special Investment Contract (SPIC), submitted to the Ministry of Industry and Trade, was never signed. The parties did not agree on the working conditions, after which BMW completely ruled out the possibility of building a local plant. The German concern also did not participate in the SPIC concluded by Avtotor [3]. That is, there is a fairly high probability of a greater appreciation of BMW cars in comparison with Mercedes-Benz, which means that BMW is unlikely to be able to show a higher sales result than Mercedes-Benz.

References:

1. The official website of Mercedes-Benz in Russia. URL: https://www.mercedes-benz.ru / (accessed 14.12021)
2. Official BMW website in Russia. URL: https://www.bmw.ru (accessed 14.11.2021)
3. BMW is reducing production at Avtotor: three models will remain. URL: https://autoreview.ru/news/bmw-sokraschaet-proizvodstvo-na-avtotore-ostanutsya-tri-modeli (accessed 14.11.2021)
4. VERcity portal.   URL: https://auto.vercity.ru (accessed 111.2021)