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Hitting the “Reset Button” in the Luxury Market

A 40 mpg Mercedes sedan.

by on Dec.15, 2009

Many luxury buyers are moving down-market, says a senior Mercedes-Benz official, opting for the smaller E-Class instead of the top-line S-Class.

Many luxury buyers are moving down-market, says a senior Mercedes-Benz official, opting for the smaller E-Class instead of the top-line S-Class.

As bad as 2009 has been for the overall U.S. car market, it’s been especially tough for high-line manufacturers, like Mercedes-Benz.

Where past recessions have left luxury brands largely unscathed, most premium brands have suffered hefty double-digit downturns, this year.  And though 2010 looks likely to be a bit better, the luxury market may have gone through some significant and potentially permanent changes, Mercedes officials suggest.

“If anything, 2009 was a reset year,” said Steve Cannon, the German maker’s U.S. marketing chief, during a visit to Detroit.

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For one thing, it’s forced manufacturers like Mercedes to rethink the way they pitch potential buyers.  Over the last several decades, the luxury segment has increasingly turned to incentives and, in particular, subsidized leasing, to attract buyers who really didn’t belong in the luxury segment, said Cannon, who admits the cost has been “too high.”

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