Thailand and Malaysia are among the largest plug-in hybrid markets for Mercedes-Benz globally

To say Mercedes-Benz’s tristar is shining bright would be understating it. Last year, its sales grew by 9.9 % to 2.3 million vehicles, and the brand achieved a 24% year-on-year growth to US$43.9 billion. Records continued to be made along the way – in May, the company reported that it had achieved 63 consecutive months of record sales globally. The numbers also gained it new status, with Brand Finance naming the automaker as the world’s most valuable premium car brand.

There’s no letting up, and not just from the conventional sense, what with new directions being explored. One of these is with EQ, its electric vehicle sub-brand. By 2022, Mercedes says it is planning to electrify models from its entire portfolio of vehicles, with more than 10 fully electric passenger cars being introduced across all segments by then. Investment in production facilities has already begun.

Plug-in hybrids via the EQ Power route will also continue to be part of the expansion strategy, according to Matthias Luehrs, head of overseas region, Mercedes-Benz Cars. Luehrs was in Malaysia recently, and we managed to catch up with him to find out more about future developments and, closer to home, what the automaker has outlined for the region and the local market.

Much of the initial surge for electrification will be through the company’s plug-in hybrids. “Our hybrid initiative is in full swing. We already offer our customers one of the broadest ranges of plug-in hybrids in the premium segment today, with eight vehicle models on the road,” Luehrs said.

As for electrification, things are only expected to take off sometime in the middle of the next decade. “When does it take off in quantifiable terms? We at Mercedes-Benz assume that by the year 2025, the share of all-electric vehicles should represent up to 25% of our total unit sales, or around 75% will be combustion engines and plug-in hybrids,” he said.

He added that an increased rate of adoption will depend on a number of factors, including government support for the format. “It will be definitely different from country to country. What we see at the moment is that for EVs to take off you need some aspects to be met. One major pillar is sufficient infrastructure,” he said.

“Further, the car has to be attractive to the customer. You can’t just take a normal model and make it electric and (expect) everyone will buy it. First, it has to be reliable in terms of offering a sufficient reach and the right infrastructure in terms of available charging stations. Second, it needs to be emotional when it comes to driving dynamics and have a unique electric design,” he stated.

“Finally, talking about electrification, innovative technological features regarding the ecosystem and connecting services for maximum customer convenience become a major success factor. It’s also important to strengthen the trust of the customers into the new technology. They must have the confidence that the cars will really reach the desired distance, be it 300, 400 or 500 km. If you have all these aspects, then EVs will start taking off,” Luehrs explained.

In the meantime, the limelight is very much on hybrids, and things are going very well on that front in ASEAN, he revealed. “For us, you’d probably be surprised to know that one of the biggest plug-in hybrid market worldwide for Mercedes last year is Thailand. In 2017, our plug-in hybrids achieved a strong double-digit growth by more than 80% there, also because of the big tax incentive provided by the government,” he said.

“Also in Malaysia, we were able to increase our plug-in hybrid sales volume to a higher level, pushing Malaysia inside the top ten markets when it comes to our plug-in hybrid sales in 2017. There’s great trust in the brand and our technology,” Luehrs stated.

The automaker has certainly been gearing up for the increased activity in the region, specifically in Thailand. In March, it announced that it was set to build – in partnership with local partner Thonburi Automotive Assembly Plant (TAAP) – a new hybrid battery assembly plant in Samut Prakan. Production is set to begin in 2019.

We asked if building the lithium-ion batteries in the Kingdom would enable exports to the region. Luehrs explained that at present, local production of batteries is crucial to serving local demand and for the success of the brand’s plug-in hybrid portfolio in Thailand.

There are however no plans to follow competitor BMW’s move to carry out local assembly of engines in Malaysia, or for that matter, anywhere in the region. “We have an assembly plant for engines in China, but there are no definite plans to assemble engines in the ASEAN region,” he stated.

Exports of locally-assembled models to the region, however, are a possibility. Luehrs says that the company sees big potential in the Malaysian market and is looking at more models for CKD assembly. “There are plans to grow our volume here and we are studying markets within ASEAN where we can potentially export vehicles to. There’s no final decision yet on this, but we’re very optimistic,” he said.

In terms of products, Luehrs says that he sees a growing trend towards compact cars and SUVs in Asia. “In Europe, nearly 40% of our sales are through compact cars, which is not the case in Asia. Of course, we do see more emphasis on compact cars and SUVs from customers and we are expanding our portfolio, and here you will see more lifestyle-oriented products,” he said.

Elsewhere, Mercedes me connect is coming to Malaysia. “We are definitely going to introduce Mercedes me connect in Malaysia, likely in the next year or the year after. As soon as we are ready with local providers, we will do it,” he explained.

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