Global semi-conductor shortage poses bigger threat to popularity of C-Class sedan icon, says Benz
Mercedes-Benz says the global semi-conductor shortage will potentially pose more threat to Australian sales of the new-generation W206 Mercedes-Benz C-Class than dramatic price increases.
As announced last month, the entry-level 2022 Mercedes-Benz C 200 has risen $12,000 – or 18 per cent – from $66,900 to $78,900 plus on-road costs.
The C 300, meanwhile, has climbed $15,100 – or 20 per cent – from $75,300 to $90,400 plus ORCs.
While new-car price rises have been constant in Australia in recent years, these are substantial hikes for a volume-selling vehicle and make the new C-Class – which has just been launched in Australia – much more expensive than equivalent BMW 3 Series models.
But Mercedes-Benz Australia/Pacific product communications spokesman Ryan Lewis said the W206 should ensure the C-Class bounces back as one of its top-selling models after a quiet year in 2021 during generational changeover.
There were 2832 examples of the C-Class sold in Australia in 2021, making it the fifth-most-popular Benz. It was last on top of the pile in 2019 when 6798 examples were sold.
The GLC SUV is nowadays the brand’s most popular model in Australia, while the Tesla Model 3 is the nation’s top-selling premium sedan, selling more than 12,000 examples in 2021.
“Even with the development of other segments and our continued growth, there is a customer base for a new C-Class at this time and we are pleased to cater for that market,” said Lewis.
“We expect C-Class to be in our top three most popular models locally, however its sales volume will be subject to supply, as our brand, like the industry in general, continues to be affected by ongoing semi-conductor shortages.”
The semi-conductor shortage has already had one impact on the new C-Class, with an options pack comprising adaptive dampers and four-wheel steering currently unavailable.
Much of the local C-Class price rise is put down to a significant bump in W206’s standard equipment compared to W205 that is valued at more than $10,000.
However, that number is a perceived customer value estimate not an actual purchase and manufacturing cost for Mercedes-Benz.
It’s much more common for auto brands to announce a multi-thousand-dollar bump in equipment value of a new model but then only pass part of it on in price rises.
The C-Class price increase was also attributed to a complete overhaul of the architecture and drivetrains, the body and the interior of what is a fundamentally new car.
The C 300 also now transgresses the luxury car tax limit and incurs a $4904 surcharge that wasn’t previously charged.
Benz also admits the new C-Class’ local pricing is the victim of increasing manufacturing and shipping costs that have impacted the global industry.
“If we look at retail prices in Germany, the new C 200 is positioned approximately €5000 ($7610) above the previous generation,” Lewis said.
“The base cost of the W206 is influenced by several factors, such as the increased level of technology, which has put it closer to the S-Class than ever before, and the larger dimensions of the vehicle body.
“Mercedes-Benz currently faces high price volatility on raw materials and commodities in general – especially since the COVID-19 pandemic. The highest impact for us continues to be steel prices.
“In a business update published last week [global CEO] Ola Källenius acknowledged the increasing price of vehicles noting that ‘it will not fully offset the raw material headwinds which are expected to increase in 2022’.
“The outlook on other costs of doing business can also have a bearing on vehicle pricing to some degree, such as the logistics of transportation to Australia.”
Lewis told carsales the standardisation of previously optional equipment made sense for both Benz and C-Class buyers.
“It simplifies the options list for customers and streamlines the purchasing process,” he explained. “As an example with the last gen, more than 75 per cent of C 200s were sold with the optional AMG Line package.
“With that equipment now standard it means vehicles we have in stock are more likely to be in a configuration customers are looking for.”
Lewis also rejected any link between the repricing of the C-Class and the introduction of agency retailing, which replaces the old franchising structure and removes dealer discounting from the process.
The C-Class is the first price increase Mercedes-Benz has announced locally since agency went into effect on January 1, 2022.
However, price rises across various model lines were recorded by pricing and valuation experts during 2021.
carsales sought reaction from expert auto industry sources on the C-Class price rises. While they acknowledged they were substantial, they also felt they were justifiable.
“Sales will tell if Mercedes-Benz has got it right,” was a common response.
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Keyword: Mercedes-Benz C-Class sales to rebound, despite price hikes