The ultra-exclusive Mercedes-Maybach S 680 Virgil Abloh edition
Mercedes is recalibrating its strategy, aiming to increase its presence in the higher-priced super-luxury market and trim some of its least-expensive models.
The move reflects trends in American car shopping habits — even as the price of the average new car has risen, consumers have sought out more luxury cars in recent years. Luxury vehicles made up more than 17% of the cars Americans bought last month – a near-record.
In a session for investors last week, Mercedes noted that sales of its flagship S-Class sedan increased 40% last year. Its ultra-luxury Maybach and pricey high-performance AMG sub-brands set sales records.
The company reports that it sold 10% fewer models in the first quarter of 2022 than one year before but was 20% more profitable thanks to sales of higher-end models.
Cutting Cheaper Models
Over the past two decades, Mercedes has engaged in a three-way dogfight with BMW and Audi to become the German luxury brand with the most extensive lineup. That may be over.
In a statement, the company said it plans to refocus on “our goal to build the world’s most desirable cars.”
CEO Ola Källenius told the Irish Examiner that would mean cutting some entry-level models. “We will still cater to the entry-level luxury segment,” he said. “But we will trim the portfolio. Today we have seven models in that segment; in the future, we will have four,” he added.
Since Källenius was speaking to a European press outlet, his calculations might include some models not sold in the U.S.
But, he explained, “we are not going to go in and compete with the volume makers — that’s not our place.”
More Exclusivity: Mercedes Mythos
Mercedes may pull back on its offerings for entry-level buyers. But it’s doing the opposite at the other end of the market.
In a session for investors last week, Mercedes unveiled plans for a new super-luxury sub-brand: Mercedes Mythos. Mercedes revealed little about the plan, saying only that its products will appeal to “the most dedicated enthusiasts and collectors of Mercedes-Benz.” A slide shown to investors last week appeared to show a retooled SL Speedster, heavily shadowed, beneath the Mythos badge.
Electric Plans Not Changing
In announcing their new strategy, executives clarified that Mercedes’ electric car plans have not changed. Last year, the company announced plans to go all-electric by 2030 in markets that build enough infrastructure to support the transition.
Mercedes has begun introducing electric alternatives to many of its vehicles, with a gas-powered and an electric offering in each market segment. The ultra-luxe EQS, for instance, plays a similar flagship role to the S-Class.