You honestly would have to be living under a rock to not know what Mercedes is! Jokes apart, I think we can all agree easily that Mercedes-Benz is one of the topmost easily recognizable car brands in the world. Enthusiasts and amateurs alike, everyone has a reason for liking the brand, be it it’s amazing performance or sleek looks. However, to fully appreciate everything the company has going on for them, we can look at this Mercedes-Benz SWOT Analysis.
The brand was started in 1926 by merging two individual cars; Daimler-Motoren-Gesellschaft which made Mercedes and German automobile engineer Karl Benz’s Benz patent motor wagon. This means the company has been around for 95 years!
They have their headquarters at Stuttgart, Baden-Württemberg, Germany. As of 2020, the company has proudly been able to sell 2,164,187 units of it all around the world. The company specializes in both luxury as well as commercial vehicles.
In the following SWOT analysis, we are going to be taking a dive into certain factors and events which shape up the current situation of the company, particularly four key factors. Any factors which lead to prosperity and well-being for the company are its strengths. Consequently, any factors or events which have led to negative outcomes for Mercedes will be classified as its weaknesses.
Any factors which can be explored by Mercedes in the future to the best of its advantage will be the opportunities and any factors which are currently dangerous to the brand’s health will be threats.
Now that we have the factors a bit more defined, before moving on we should also clearly classify them too. The first two factors i.e. strengths and weaknesses are called internal factors whereas the latter two i.e. opportunities and threats are called external factors.
Internal factors have the ability to impact the “inside” of a business and can mostly be easily controlled by the company under consideration. External factors on the other hand are out of anyone’s hands and cannot be controlled. This makes them slightly trickier than the former.
Let’s explain this better with an example. Mercedes having an excellent supply chain for its services is its strength because it is possible by the company’s collective efforts. It is controllable. But people moving on from their vehicles to some other alternatives because of emerging trends would be a threat because the company cannot directly control company turnovers.
Let’s now see in detail where the brand is standing these days.
What are Mercedes-Benz’s major strengths?
Although we can write a book on why and how Mercedes is a very potent brand, for the sake of convenience here are some of the most prominent strengths the brand boasts.
It does not need much justification that Mercedes-Benz is one of the most powerful and influential brand names of this era. One instantly thinks of this company when thinking about premium luxury cars.
They have been able to establish this amazing place in the global perspective by being available; currently, they sell vehicles in South Africa, Canada, Singapore, Vietnam, Thailand, Australia, Japan, South Korea, Portugal, Poland, Switzerland, Belgium, Spain, France, UK, Germany, USA, and China amongst many others.
Obviously, a brand as big as Mercedes will be expected to prioritize allocating investments to their research and development programs; it should not come as a surprise but they have taken it to the next level.
In 2020, they have opened up a state-of-the-art R&D center in China to further expand their research work to stay ahead in their game. This site in Beijing is an addition to their previous programs, costing 13.5 million EUR.
The company invests this huge amount in China because they have accepted that the country is the hub for automotive success.
How much do you think the company is worth today? While it is impossible to know the exact amount there are various estimates which say that the average net worth of Mercedes in 2021 is 75 billion USD!
Having these kinds of numbers is perhaps one of the best strengths any business can dream to attain especially when they are as old as Mercedes.
What are Mercedes-Benz’s major weaknesses?
Alas, even Mercedes has certain weaknesses; proof that perfection is merely an ideal concept. Let’s see what the biggest weaknesses of the brand are.
Despite being a globally recognized and extremely well-selling brand, Mercedes still has many competitors in the industry who are equally as dominant if not more.
This makes it harder for the brand to gain more share of the market because the automobile industry is very dense. Brands like Stellantis, Ferrari, BMW Group, and AutoFlightX constantly keep Mercedes on its wheels. Get it? I said Wheels instead of feet because they make cars.
In 2020, the parent company of the brand, Daimler came under some serious fire when it was observed that they had installed certain software in their cars that can cheat on air pollution tests.
250,000 units of Mercedes-Benz had this issue for which the company had to pay a total of 1.5 billion USD to the US government who made the claims.
It takes a few or sometimes even one of such scandals resulting in lawsuits to completely tarnish the reputation of even the biggest brands.
Everyone is allowed to make mistakes as long as they are able to fix them. However, brands such as the one we are studying are expected to have nearly zero mistakes.
In 2021, the company decided to recall a total of 1.3 million of its units which were produced during the years 2016-21 because of a defect with their emergency communication module software. This could potentially give people incorrect addresses during emergencies.
Although the problem can be fixed easily, the most inconvenient event being a trip to the dealer, they still decided to take the matter into their own hands.
Sure, you must be thinking that I mistakenly put a strength under the weakness heading but hear this; while on one hand having great brand equity is an asset, it is also a big burden on companies to maintain their standards.
The smallest of issues, scandals, or opinions could create unwarranted problems. Moreover, the information in this day and age is alive forever in the form of the internet. Heavy is the head that wears a crown.
What are some opportunities that await Mercedes?
Mercedes is a pretty stable brand on its own but a little help never hurts anyone. They can look into the possibility of forming alliances with other car companies to gain a bigger chunk of the market and to reduce some risks.
Nissan has an alliance with Renault and this partnership has been a blessing in disguise for both of them during many bumps in their journey towards success. Sometimes you need help in achieving things that wouldn’t be possible solo.
The middle-income class is the largest group of people in almost every country and this segment continues to grow especially in developing countries such as India, Pakistan, and Bangladesh.
Mercedes can take advantage of this market and focus on producing alternatives. Yes, they do have some cars which are more economical but they can look into more variety.
Another market they can step into is electric vehicles. So far they are very new to this niche but it has a lot of potential for growth because not many car brands have great electric alternatives. Electric cars can also fit with their luxury branding because they are pretty expensive.
What are some threats facing Mercedes-Benz?
What? There are things that are threatening for THE Mercedes-Benz? Apparently so. Read on ahead to find out.
The automobile industry got very severely impacted after the Covid-19 pandemic hit the world because it all went into lockdown mode and people seldom needed to travel.
People did not buy as many cars as the years prior to the pandemic so car brands had very slow business during this time.
Because more and more people have information readily available to them they have developed a profound sense of consciousness. Nowadays, many people have been giving importance to climate change and all that they can do to prevent it.
Many choose to shift to organic, electric, or less harmful alternatives. In fact, many countries are now coming up with laws that require companies to comply with environmental standards. The future is expected to be green so many cars may become obsolete in some countries.
If I ask you to think of the top 5 most luxurious car brands, you will easily find four others to fit the slots after Mercedes or even all 5 instead. This is because there are a number of car brands that offer the same prestige, luxury, status symbols, and more.
If not taken into account, very soon another brand can take their place. So it is very important that they not get cocky and work on active strategies to stay above their competitors.
Mercedes-Benz SWOT Analysis: Final Word
If you have chosen to stick by and have now reached the very end of the article, I am going to make the assumption that you enjoyed reading it!
Hopefully, you now understand the exact position of Mercedes in today’s world especially in terms of some of the important internal and external factors which affect it, that go hand in hand with other factors demonstrated in our Mercedes-Benz PESTLE analysis recently.
There are a few weaknesses such as the software lawsuit which should be eradicated immediately before they can take an irreversible toll on the brand’s reputation. Their vehicle recalls should also be minimized as much as possible.
They also have some treats lined up for them especially in terms of their many substitutes which can always steal the market share and the after-effects of unseen events like the pandemic.
Despite being in a bit of a pickle, they have many positives going on for them as well. Their brand equity alone is a solution to many problems and their money makes it possible to invest in some of the most promising activities.
Moreover, they have amazing opportunities especially the emerging markets of electric vehicles to explore which if taken timely advantage of can surely be converted and added to their list of strengths.
Overall, the brand Mercedes-Benz has been around for so long because they have what it takes. I don’t expect them to become a “has-been” brand anytime soon.
One of the easiest tools you can learn and implement to good use for better understanding a business, an industry, an organization, or even a country at large is the humble yet mighty SWOT analysis.
Not only does it accurately highlight and precisely point out the various internal (strengths and weaknesses) and external (threats and opportunities) factors of an entity for you, it also allows you to know what and how to improve.
This is why we recommend that everyone should be aware of the mechanisms of a SWOT analysis. it does not matter if you aren’t a business owner, you still might be a student or someone working for a business both positions of which would need you to be aware of this knowledge.
Don’t be scared if you have not worked on a SWOT before, you can easily start by using a nice template to help bring your hand to practice. However, if you feel like you have enough knowledge to take on one of your own, go for it! Another way to learn is to have a look at a few more examples.
You still might need a framework to jot it all down easily and concisely. Here’s to you working on the first of your many SWOT analysis!