16 June 2010

Mercedes-Benz Plans New Ad Push

The Wall Street Journal

STUTTGART, Germany—Daimler AG's core Mercedes-Benz division is launching a global marketing campaign Friday, including a new advertising slogan—"The best or nothing"—and a redesigned version of its three-pointed star brand symbol.

"Our claim has to reflect that we want to be the best in all disciplines," Mercedes-Benz sales chief Joachim Schmidt told reporters on Tuesday, referring to the brand's new advertising slogan. His remarks were embargoed until Thursday.

He said the campaign will be financed from Daimler's existing marketing budget, which accounts for about 2% of the German auto maker's annual revenue, but declined to provide a specific figure. TV advertising will account for around 40% of the campaign, print media for around 45% and online media for 15%.

Mr. Schmidt reiterated that the Stuttgart-based company targets a car sales rise of at least 7% year-on-year in 2010, compared with a rise of the overall market of between 3% and 4%. Growth is expected to be driven this year by rising demand, particularly in the U.S. and in China.

In April, Daimler Chief Executive Officer Dieter Zetsche said the Mercedes-Benz brand alone is to achieve annual sales of 1.5 million vehicles by 2015, compared with 974,700 in 2009, with the Smart minicar brand set to contribute additional sales volume after its future has been secured through the partnership with Renault SA and Nissan Motor Co.

The sales target was previously for the entire Mercedes-Benz Cars division, which comprises the Mercedes-Benz, Smart and Maybach nameplates.

The Mercedes-Benz Cars division on Monday posted a 14% global sales rise in May to 110,700 vehicles, with the core Mercedes-Benz brand posting an 18% rise year-on-year to 101,400 vehicles, and anticipates double-digit growth in the second quarter.

Sales at the troubled Smart minicar brand last month dropped 15% on year to 9,300 cars. Daimler expects the new generation of smart cars to boost sales when they are launched in the third quarter of 2010.

Last month, Daimler said second-quarter earnings before interest and taxes, or EBIT, for its Mercedes-Benz Cars unit is expected to be higher than the first quarter's €806 million ($972 million). The Stuttgart-based firm expects its core division to reach its 10% return-on-sales target in the second half of 2012 and to maintain it for the full-year 2013.

The recovery in the luxury car segment gained momentum in recent months.

Daimler anticipates the division's full-year EBIT to come in "at the upper end" of its forecast of between €2.5 billion and €3 billion. Many analysts, however, expect the unit to exceed this target range as the firm benefits from a strong model mix and soaring demand for its lucrative flagship S-Class and E-Class vehicles.

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