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Mercedes Has Big Plans for Small Cars

CLA provides new “gateway” for brand to attract Millennials.

by on Sep.25, 2013

Mercedes is looking to make inroads with younger buyers with the CLA model.

Mercedes-Benz is betting big on its new small car line-up, the launch of the 2014 CLA part of a strategy designed to provide a “gateway” for the next generation of luxury car customers, explains the German maker’s U.S. marketing chief.

The CLA is the first U.S. model based off Mercedes’ New Generation Compact Car platform, or NGCC. But it will be followed by two others, the GLA compact crossover and an electrified version of the Mercedes-Benz B-Class already on sale in Europe.

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Slightly smaller than the current Mercedes C-Class, the new CLA carries a downsized price tag starting at just $29,900 – which is meant to appeal to buyers who might otherwise be attracted to well-equipped mainstream products, such as Ford Fusion Titanium edition, or the top-line version of the Honda Accord, said marketing chief Bernie Glaser.

With a price of $29,900, the new CLA is aimed at drawing buyers who would normally purchase well-equipped Ford Fusions or Honda Accords.

“We decided to aggressively price the car in the U.S.,” the executive explained during an interview with TheDetroitBureau.com, “because price was essential for us to have a conquest car.”

Despite the low price tag, Mercedes plans to emphasize the fact that this isn’t a “stripped-down” model, Glaser stressed, but is equipped with a wide range of creature comfort and safety features and boasts a much more well-appointed interior than the brand’s previous attempt to create a gateway model, the ill-fated C-Class Coupe of a decade back.

Mercedes was able to hold down the price of the new 2014 CLA by sharing a common platform with a wide variety of models. Europeans also will get the conventionally powered Mercedes B-Class as well as a second-generation A-Class model. Also a factor was the decision to produce the various models at a factory in Hungary where labor rates are significantly lower than in Mercedes’ home base of Germany.

(Mercedes is also in negotiations with alliance partner Nissan and could eventually produce the upcoming Mercedes GLA crossover at a new plant in Mexico set to open next year.)

The launch of the CLA and subsequent small cars will be a critical step for Mercedes, according to Glaser, who notes that aging Baby Boomers currently comprise the brand’s biggest buyer segment.  “But Gen-Y make up the next big wave,” he stressed, so, “If you want a future, you have to have a Gen-Y strategy.”

Company officials decline to discuss their sales targets for the new CLA, GLA and B-Class Electric, but Glaser suggests “they are not going to be niche products.” He points to the original C-Class, the so-called Baby Benz, which started out small but eventually became the best-selling model in Mercedes’ U.S. line-up.

In particular, Glaser said Mercedes has particularly strong hopes for the GLA as “the small crossover is the next big explosion in the U.S. market.”

Indeed, a wide range of makers – both mainstream and luxury — are targeting the compact crossover segment, including such brands as Honda, Infiniti, Lexus, Lincoln and even Jaguar, the British maker revealing the C-X17 Concept at the Frankfurt Motor Show earlier this month.

(For a first look at Mercedes S-Coupe Concept, Click Here.)

The various downsized models based on the NGCC “architecture” will not only help Mercedes gain traction with Millennials, the maker is betting, but also serve another critical purpose. They are “part of our CAFE (Corporate Average Fuel Economy) and greenhouse gas strategy,” explained Glaser.

(Click Here to read about the pricing for the new S-Class.)

Luxury makers like Mercedes are facing a particularly tough challenge, going forward, meeting the 54.5 mpg standard set for 2025 in the U.S. Mercedes plans to address its target in a variety of ways, including new electrified vehicles like the B-Class, the expanded use of downsized, turbocharged engines, a growing line-up of diesels, and more fuel-efficient models such as the CLA and GLA.

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One Response to “Mercedes Has Big Plans for Small Cars”

  1. Jorge M. says:

    “…provide a gateway”. Yeah, right. What the Audi, BMW and Mercedes new small cars are all about is increased sales volume. These cars are looking to dilute the brand IMO at the expense of a quick bump in revenue. Naturally this is good for current management but a real problem long term for the next CEOs who will need to try and save the brand from becoming part of the bland.