* Mercedes-Benz 2016 passenger car sales rise 11.3 pct on
* Mercedes-Benz brand annual sales reach 2.083 mln passenger
* Sales up 26.6 pct in China, and 12.4 pct in Europe
By Edward Taylor and Ilona Wissenbach
STUTTGART, Germany, Jan 9 Mercedes-Benz is
expected to reach its goal of becoming the largest premium
carmaker four years early - a feat achieved, ironically, only
after it stopped chasing market share and focused on making
stylish high-tech cars loved by consumers.
Introducing an elegant, sporty design and establishing
itself as a pioneer in new technologies like autonomous driving
has helped revive the Mercedes brand which analysts say will
help keep the Stuttgart-based carmaker ahead of the pack.
The achievement is a coup for Daimler Chief
Executive Dieter Zetsche, who struggled to revive the company
following a messy divorce from mass market brand Chrysler in
2007. Less than four years ago Zetsche faced restive
shareholders, worried that the automaker was lagging behind
rivals BMW and Volkswagen AG's Audi brand.
"We had some deficits, cost and quality problems. Design was
not top-notch. And with Chrysler we were no longer a pure
premium carmaker," Zetsche told Reuters in an interview held
late in 2016 in his office at Daimler's headquarters in
On Sunday, Daimler said it had sold 2.08 million
Mercedes-Benz branded passenger cars in 2016, a lead that BMW,
which has held the premium sales crown since 2005 and is due to
release annual sales figures on Monday, is not expected to beat.
Including sales of the Smart brand, Daimler sold 2.23
million passenger cars last year, the company said.
Zetsche has presided over a renaissance in the design and
technology of Mercedes vehicles, refocused the company on
technological superiority instead of short-term sales goals, and
adapted the entrepreneurial mindset of Silicon Valley to the
traditionally risk averse culture of Stuttgart.
Daimler is also preparing for a new era when the auto
industry's business model moves beyond manufacturing and selling
cars, to lure customers interested in pay-per-minute transport
solutions provided by autonomous cars.
Zetsche set the goal of making Mercedes the best-selling
luxury carmaker by 2020 at the company's 125th anniversary in
2011, a year when even Audi sales overtook those of
Mercedes, pushing it into third place.
"Since then we worked hard and today we are leading or among
the leaders when it comes to innovation, quality, design and
security," Zetsche said.
Daimler traditionalists were shocked by the volume target,
fearing that selling too many vehicles may dilute the
exclusivity of their cars and reduce the appeal of the Mercedes
brand in the long run.
But consumer electronics companies like Apple had
already proven that the pull of their brand did not suffer with
increased volume sales so long as they offered the best customer
Audi was gaining traction with customers thanks to cool
designs, so Zetsche appointed a young designer, Gorden Wagener
to head up Mercedes design. He introduced an elegant and sporty
style to spruce up Stuttgart's Teutonic limousines. Mercedes
cars were also equipped with state-of-the-art digital display
technology, luring smartphone savvy customers.
It was a change for Mercedes where engineers always believed
they were producing the best cars in the world, but measured
quality mainly using technical or engineering criteria, a
strategy which often led to powerful cars with expensive and
complex technical innovations.
Today, Mercedes-Benz follows its motto "the best or nothing"
by thinking about whether customers would notice or benefit from
a new technological innovation, and by benchmarking the brand
against competitors, Zetsche said.
The company's renaissance began in earnest in May 2013 with
the launch of a new flagship S-class. To burnish its credentials
as a technology leader, Mercedes developed a prototype version
which drove around 100 kilometres (62 miles) autonomously the
Rather than designing a limousine which appealed mainly to
rear seat passengers, the new S-Class featured large digital
display screens on the dashboard, a deliberate attempt to appeal
to a younger, driver-focused audience.
The same youthful design approach was used for the new
C-Class and E-class designs, which are now the company's volume
Mercedes also revived the Maybach brand, a marque targeting
the ultra-luxury sector which the company had stopped making
after the prior bespoke design failed to gain traction, leading
the car to sell only 200 times in its final year of production.
Since Maybach's latest revival in February 2015, Daimler has
sold 15,000 cars.
"The rewards we are reaping today are the logical
consequence of careful preparation," Zetsche said.
(Editing by Georgina Prodhan and Alexandra Hudson)