Mercedes battles to keep taxi share

Brand wants to regain lost ground with special discounts

Hamburg, Germany. The battle for a bigger share of the German taxi market keeps getting tougher.

There was a time when Mercedes-Benz was able to achieve taxi market shares far beyond the 80-percent mark. But after decades of a nearly complete dominance, competitors are seizing big chunks of the market.

Technical problems with the E class have badly damaged the market leader, said Karl-Heinz Neugebauer, president of the state personal transport trade group in Hamburg. The model had long been one of the favorites among taxi firms for its size and reliability.

"The Vaneo was bad, the Vito and the V class were bad, and the (E class) wasn't good," he said. Rust and electrical problems led to dissatisfaction among taxi companies.

It no longer pays to spend several thousand dollars more for a Mercedes, said Frederik Wilhelmsmeyer of the federal association of German tax and rental car firms.

The dissatisfaction, meanwhile, has made its way into the market.

Mercedes' share of the total taxi population of 50,000 vehicles has fallen significantly, said Lothar Aschmann, taxi expert at Assekuranz Signal Iduna. The firm is considered the main insurer in the taxi industry.

Mercedes' share of the taxi market, which was 80 percent just five years ago, now stands at 65 percent. Volkswagen has 15 percent, Opel has 5 percent, and Ford, Audi and Mazda each have 2 percent. Other manufacturers split the remainder.

The greater variety of models on the market also is putting pressure on DaimlerChrysler. Taxi companies are happy to order a VW Touran or a Passat Variant, or an Opel Zafira.

That trend is showing up in new-vehicle sales figures.

Of the 10,000 new taxis registered between July 2004 and July 2005, there were only 4,500 Mercedes. VW tallied 4,000 vehicles, and Opel 1,000, Aschmann estimated. Audi had 200 units, and BMW hardly shows up at all.

A good presence in the taxi industry pays off. DaimlerChrysler figures that more than 1 million passenger impressions take place each day in German taxis. Since there are many new vehicles among the taxi fleet, "every day thousands of test drives take place," said Andrea Bandt, manager of product management for Mercedes-Benz cars in Berlin.

Taxi drivers' experience with their cars can influence potential customers. This motivates DaimlerChrysler to slow the advance of VW and other carmakers.

Since July, Mercedes has been offering specially equipped B-class and E-class models with 20 percent discounts. It is supporting the campaign with 1.9 percent financing.

What impact the deal will have is unknown. Waiting time of six months for a new taxi are standing in the way of any demand stimulated by the deal, Neugebauer said.

Tags: Marketing

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