The Journal The Authority on Global Business in Japan


May 2014
Cracking Japan
Mercedes-Benz defies accepted approach to become top-selling luxury car here
Custom Media

On the face of it, attempting to sell a foreign car in Japan is a daunting task. Even when that brand is a byword for elegance, luxury, and mechanical excellence, Japan remains the home market for many of the world’s most well-known automotive companies.

Cracking Japan arguably has become even more difficult given the current domestic economic climate. But Mercedes-Benz has defied the accepted wisdom. Not only is it thriving in Japan but, in the three years since the global financial crisis and the triple disaster of March 2011, it has risen to become the top-selling luxury car here.

The strategies the Stuttgart-based company employed to overtake its high-end sector Japanese rivals—Lexus, BMW, and Audi—were outlined by Marc Boderke, representative director and vice president of Mercedes-Benz Japan Co., Ltd., at a luncheon on April 3 at the Tokyo American Club.

The tactics and lessons learned have relevance for any foreign company looking to do business here.

“We want to ensure that our current customers stay with us, so we need to make them happy so they remain loyal,” Boderke said.

“But, at the same time, we also have to acquire new customers to show growth. The task is to be efficient at both ends.”

Mercedes-Benz has built a solid reputation, meaning that existing customers are invariably happy with the product; “a good starting point,” Boderke believes.

However, the challenge is to attract a new generation of drivers.

“To do that, there is no such thing as a silver bullet,” he said. “We need to apply a range of measures.”

Mercedes-Benz’s approach to the Japanese market is to apply measures along all of the six marketing Ps: product, price, place, promotion, process, and people.

“We are trying to broaden our product line-up offering in Japan because, from our perspective, it is very important that we deliver the latest technology here,” he explained. “Japanese customers are very responsive to the latest technology and gadgets.”

Another key element of the strategy is to emphasize the youthful and sporty style of the vehicles as Mercedes-Benz reaches out to a new, younger audience.

“We are trying to strengthen the emotional appeal of the brand, meaning that it is not only about functionality and rational values,” he said. “We want to appeal to the heart as well as the brain of the buyer.”

Mercedes-Benz has increased its range to 26 vehicles, with several new projects in the pipeline. But a great deal of the company’s focus remains on the latest technology that is incorporated into the cars.

In 2001, the company was the first to put a fuel-cell vehicle on a Japanese road and, in 2006, was the first to bring diesel engines back after the government dramatically tightened regulations on emissions.

An even newer innovation is the autonomous driving project, which was tested on a 100km route in Germany last year. Following the same route as Bertha Benz took 125 years ago in the world’s first petrol-powered car, the descendant of that vehicle is able to recognize traffic lights, road signs, and surrounding vehicles, while making the necessary adjustments to ensure it reaches its destination safely without the help of a driver.

“It’s fair to say we are convinced that we are at the leading edge in this technology and, although this is still a future concept, this car uses technology that is already available on the market today,” he said.

“Japan is probably the most demanding market in the world, where the customer has high expectations of the product and services,” he added. “It is up to us to meet those requirements.”