The luxury car segment continues to experience weak sales, declining by 8–9 percent as of October, as the market becomes flooded with choices—including electric vehicles—amid an overall slowdown in the local and global economy.
Maricar Parco, general manager of Mercedes-Benz Philippines, said that although the decline in sales has eased from 15 percent at the start of the year, it still remains a decline.
The luxury car market, which currently comprises around 8–9 brands locally, is a small segment with only about one percent of the total market and is defined by a price point starting at PHP 4 million.
The market leader is Lexus of Toyota, accounting for 50 percent of the segment, followed by BMW and then Mercedes-Benz.
Parco attributed the decline to the wide range of options now available, aside from the economic slowdown not just locally but also globally. “I think it’s really the options. We have so many, I think it’s really the options. The decision process is getting slower because everyone wants to check out, right?” she said, noting that the industry now has around 30 car companies, up from only about 10 a few decades ago when she was just starting in the industry..
She also noted a shift in vehicle ownership among the younger generation, who prefer using public transportation or ride-hailing services over owning a personal car.
Mercedes-Benz
In the case of Mercedes-Benz, Parco said they are performing even lower than the industry average, with sales down 20 percent from last year.
As a strategy, Parco said they will continue to introduce plug-in hybrid models because these are currently more preferred than pure EVs. Their EV lineup, called the EQ models, includes eight variants. They previously sold roughly 200 units, before sales slowed this year.
Mercedes-Benz introduced the E-Class hybrid earlier this year and are are able to price lower because of tax incentives for EVs.
“So, that’s our trend now. Trying to bring in more plug-in hybrids,” she said.
But the company will continue offering internal combustion engines because most of their customers still prefer them for performance. “They want to feel the engine, they can hear the revving,” she said.
With 140 years of expertise, Parco said they always emphasize to customers that they will never compromise on safety and vehicle quality.
Sentiment
When asked whether recent corruption issues have also dampened automotive sales—especially among luxury brands—Parco said it could be a factor. In the case of MB, she emphasized that they always follow government regulations.
More broadly, she said that when the economic environment is unstable, the market tends to be cautious. “You have to be liquid just in case. You push back luxury purchases,” she said, clarifying that this is her personal perspective.
She added that even within the ASEAN region, the car market is also facing challenges.
The German brand Mercedes-Benz is distributed locally by Inchcape, the world’s largest global automotive distributor, with a presence in around 30 countries. It is based in London in the UK.
It entered the Philippine market two years ago when it partnered with the CATS Group after acquiring 60 percent of the company, with CATS retaining 40 percent.
Mercedes-Benz currently has four dealerships in the Philippines: Greenhills, Alabang, BGC, and Cebu.
