In reflection upon the tumultuous journey of 2023, Mercedes-Benz South Africa (MBSA) embraces the adage that "rough seas make great sailors." Amidst a landscape marked by challenges and triumphs alike, our company has emerged resilient, fortified by the crucible of adversity. As the steward guiding MBSA through these tempestuous waters, I take pride in our collective resilience and ultimate triumph.
East London Manufacturing Plant
2023 marked the commemoration of our 65th anniversary of manufacturing excellence in South Africa. Over the years, the East London manufacturing plant has solidified itself as a strong partner within the Mercedes-Benz network, producing the C-Class sedan in left- and right-hand drive with exports to over 80 markets globally. Out of Africa, for the World, we continue to deliver on our objectives: quality products, production volumes and sustained production efficiencies.
In 2023, we witnessed the 100 000th new generation C-Class roll from the production line. The teams worked hard to ensure a successful ramp-up of the C43 and C63-AMGs which are both manufactured for local consumption and for exports.
Mercedes-Benz remains a reflection of reliability, luxury, safety and quality. It is for this reason that the East London plant kickstarted the journey towards competing for the J.D. Power awards. Considering our long history with the J.D. Power awards following a six-year consecutive win, we decided to vie for more to obtain our 7th quality award. In the past, the East London manufacturing plant has been awarded six J.D. Power Awards: three silver awards (2012, 2013, 2014), two gold awards (2009, 2011) and a platinum award in 2010. In accordance with the Diamond strategy pillars and our vision in mind, a Diamond Product is what we always endeavor. Whilst we were not successful in this pursuit, we remain committed to building quality and will contend for more J.D. Power awards in future.
Another significant milestone in 2023 was the launch of our operational strategy, commonly referred to as the Diamond Strategy. The Diamond Strategy was initiated to underline seven key ingredients to ensuring our operational success: Our Leadership, Operational Excellence, Passionate People, Innovation, Sustainability, License to Operate and Diamond Product. The Diamond Strategy is well entrenched and assimilated by employees of MBSA and we are already beginning to see the positive impact through our operational performance. In 2023, we successfully achieved our volumes targets, improved efficiencies, Voice of Customer Audits and reduced costs. Meeting these performance indicators could not have been possible without the focus on our corporate values and working as one team.
Mercedes-Benz Cars
The performance of the automotive industry is a microcosm of the macro economy. Domestic new vehicle sales continued with a declining trend owing to a range of factors, inclusive of the recovery from the COVID-19 pandemic, persisting strain on household incomes, higher interest rates and fuel prices. Against these pressures for most of 2023 the market was well on track to recover to the pre-pandemic level of 2019, but the impact of the depressed economy, elevated cost of living and new vehicle sales pressures resulted in finishing the year -4.4% below the previous year.
Our flagship product, the locally manufactured Mercedes-Benz C-Class sedan suffered from the general shrinking of the segment but was ably countered by an excellent performance by the GLA in the fastest growing entry SUV segment. The launch of the latest generation GLC SUV, received widespread acclaim from both the media and consumers, resulting in significant market uptake and nominations in the Cars.co.za Consumer Awards competition and the South African Guild of Mobility Journalists Car of The Year awards. Feats that underscore the vehicle’s excellence in the mid-sized premium SUV category.
To support the goal for increased sales and to further bolster its presence in the market, in 2023, Mercedes-Benz Cars successfully introduced the Mercedes-Benz EQ, the luxurious all-electric EQS SUV and other EQ models to the South African market.
Despite the challenges faced, Mercedes-Benz Cars witnessed increased marketing exposure, enhanced brand sentiment reflective of our focus on the premium luxury mobility and financing.
Mercedes-Benz Vans
In 2023, Mercedes-Benz Vans demonstrated resilience and market leadership in the face of significant economic and market headwinds. Retail sales volumes surpassed our revised target by a commendable 3%. Notably, the Mercedes-Benz Vito showcased exceptional performance, with a 28.5% year-on-year growth in retail sales. Furthermore, Mercedes-Benz Vans maintained its robust market share throughout the year, with both the Sprinter and the V-Class retaining their esteemed positions as leaders within their respective segments. Particularly, the V-Class achieved an impressive 84% market share, solidifying its unquestionable dominance within its luxury category.
2023 witnessed significant innovation and strategic expansion across our product portfolio. In the private sector, we launched our most exclusive van to date, the V-Class Special EDITION. This ultra-luxurious version of the V-Class generated considerable positive media coverage and resonated strongly with our elite South African consumers. Furthermore, we introduced the B4-armoured conversion of our V-Class in collaboration with one of our approved VanPartners, addressing the critical need for enhanced safety and anti-hijacking measures within the luxury segment.
Within the commercial sector, we are pleased to report the successful introduction of the new 517 Sprinter Panel Van, featuring a more powerful engine and improved fuel efficiency. Additionally, the launch of the new Sprinter Inkanyezi focused specifically on enhancements that catered towards the South African taxi industry. The new Sprinter Inkanyezi offers a more compact and efficient engine design alongside comprehensive interior and technological upgrades. These enhancements, along with our flexible finance options - designed specifically for entrepreneurs within the taxi industry - strengthen our commitment to providing South African commuters with safe, reliable, and cost-effective transportation solutions.
Sustainability
As a responsible corporate citizen, our quest to safeguard our communities and further protect the climate continues. When it comes to sustainability, we believe that every action counts. To this end, guided by our global Mercedes-Benz “Ambition 2039” agenda, in 2023, we amplified on our sustainability efforts with an investment of R100 000 million towards the second phase of our pursuit towards net carbon-neutral manufacturing. The investment will see an installation of 22 847 photovoltaic solar panels at our manufacturing plant - a key pillar of our energy strategy which will contribute towards the East London plant’s daily maximum demand requirement of 12MW in times of peak-demand. We delivered on our sustainability commitments, and the feed-in agreements required to utilise the new capacity from 2024 onwards.
Additional efforts we’ve undertaken to reduce industrial consumption of electricity on the strained national electrical grid include an installation of a static voltage regulator to stabilize supply quality and the reduction of our load by 66% during non-production days.
For our business, sustainability also includes activities on water preservation. Projects such as the identification of boreholes to safeguard for projected shortages are in progress to make us more robust to handle the future. We have also made good progress in terms of our waste management efforts and anticipate more awareness campaigns in 2024.
People
At the heart of our successful business operations is our people. As a Top Employer in South Africa for eight consecutive years, we remain committed to enriching the world of work through our employee offerings and conditions. The work we do in this regard is guided by our eight people principles: Agility, Empowerment, Co-Creation, Driven to Win, Customer Orientation, Purpose-Driven, Pioneering Spirit and Learning.
Through various development programmes, we have invested more than R149 million, to ensure our employees’ learning needs and development gaps are addressed. Our learning and development also extend to members of our communities through the provision of bursaries and skills programmes. The Mercedes-Benz Learning Academy continues to play a pivotal role in the skills development, training and upskilling talent, a significant contribution to the technical skills pool shortage in South Africa. With the transition to electric vehicles, the automotive industry needs a wide range of engineering, technology, and advanced manufacturing expertise to stay relevant in the global automotive manufacturing industry. We believe that the Mercedes-Benz Learning Academy is primed to offer these requisite skills. The Learning Academy has expanded its focus and investment on high-voltage and EV training, with strategic interventions aimed at the continued drive to focus on electrification in the automotive landscape. The skills programmes at the Learning Academy are aimed at developing future-ready production and technical employees with over 200 employees enrolling in these initiatives in 2023.
Outlook
In 2024, we will build on the progress made in the previous year, focusing on delivering on our customer promise of producing the world’s most desirable cars. Our manufacturing operations remain a priority wherein we will work tirelessly to meet and exceed our customers’ expectations by producing Mercedes-Benz units of the highest levels of quality, meeting production and volume targets.
Looking ahead to 2024, Mercedes-Benz Cars will continue with the SUV product offensive, launching the GLC Coupe, GLE and GLE Coupe model range including AMG models. For Mercedes-Benz Vans, we will unveil six new models. Leading the charge will be the highly anticipated new V-Class, bringing to life unparalleled luxury and sophistication. Joining it is the EQV, offering the pinnacle in electric-powered luxury travel. These introductions cater to the discerning individual seeking an elevated private travel experience.
Environmental and social sustainability will underscore our manufacturing, sales and marketing operations. We remain cautiously optimistic of the rebound for the manufacturing sector and will navigate the tougher operating environment with a steadfast pursuit in excellence, improving and expanding on our product portfolio in the year ahead.
As we venture into 2024, Mercedes-Benz South Africa remains poised for continued growth and innovation. With an unwavering focus on customer satisfaction and sustainability, we are confident in our ability to navigate the challenges ahead and emerge stronger, together with our esteemed stakeholders. As a Company, we remain focused on the possibilities and look forward to the journey ahead together with you.
Message from Chairperson of the Board