Mercedes May Introduce Small Cars in the U.S. - WSJ.com
Daimler AG is considering launching a series of small Mercedes-Benz cars in the U.S. in a bid to tap Americans' growing interest in downsized models that offer upscale features and finishes, the German car maker's chief executive said.
Under its tentative plan, Mercedes would import by 2012 at least one of four next-generation compact models it will start selling in Europe in late 2011, Daimler CEO Dieter Zetsche said in an interview with The Wall Street Journal. These diminutive Mercedes would go head to head with an expanding field of premium small cars in the U.S., including the A3 from Volkswagen AG's Audi unit and BMW AG's 1 series and Mini Cooper.
Unlike traditional compacts these cars can be costly; the Mini goes for as much as $34,000 depending on options.
Daimler's tentative move comes as buyers in Europe and the U.S. are increasingly redefining what they want in a luxury car. The severe economic downturn has driven even affluent consumers toward smaller and more understated models with higher fuel efficiency.
Analysts attribute some of Daimler's drop in global sales this year to a product mix heavy on large luxury models and light on more modest vehicles, compared to, for example, German rival Audi, whose sales have fallen relatively modestly.
Beyond the recession, premium car makers such as BMW and Daimler are eager not to be on the losing end on what many see as a longer-term shift toward more environmentally friendly luxury cars, as more buyers put a premium on clean technology than on horsepower and flash.
"We believe the future customer will continue to want to show some statement" in the luxury car that he or she drives but "the definition of luxury will be somewhat different," Mr. Zetsche said. "It will be fewer CO2 emissions and more modesty in appearance."
Daimler has another motive for introducing small cars, which it already sells in much of the rest of the world: They could help it meet U.S. fuel-economy standards, which are set to tighten in the next few years.
The smaller models, though, could face difficulties in attracting customers. "In the U.S., luxury is still very much equated with size," said Rebecca Lindland, senior auto analyst at IHS Global Insight.
The move wouldn't be the first time Daimler has considered selling subcompacts in the U.S. It planned to import its B-Class that it makes in Germany earlier this decade. But it nixed the decision four years ago as the euro surged in strength versus the dollar, making it difficult to price the car competitively in dollars and still earn a profit.
The currency risk would be a factor this time, too, and could prompt Daimler to shelve the plan, Mr. Zetsche said. But the next-generation Mercedes compacts are based on a less expensive "platform," or underpinings, and will be partially produced at a Daimler plant in Hungary.
Compact premium cars have had a mixed track record in the U.S. Years ago BMW launched a small hatchback called the 318, but American consumers weren't enthused about its four-cylinder engine and the German maker eventually stopped selling the car. Daimler already offers its tiny Smart car in the U.S. yet sales have been slow. But the Mini has been a hit, indicating there is a U.S. market for a stylish, premium-priced subcompact.
If Mercedes joins the field it could hinder General Motors Co. and Chrysler Group LLC. Both were reorganized in bankruptcy and are counting on boosting sales of small cars as part of their recovery. Chrysler alliance partner Fiat SpA plans to introduce sporty small cars under its Alfa Romeo brand. And GM's Cadillac has said it is looking at introducing a small car. All of them would likely compete with any offerings from Mercedes.
Source: Mercedes May Introduce Small Cars in the U.S. - WSJ.com
Under its tentative plan, Mercedes would import by 2012 at least one of four next-generation compact models it will start selling in Europe in late 2011, Daimler CEO Dieter Zetsche said in an interview with The Wall Street Journal. These diminutive Mercedes would go head to head with an expanding field of premium small cars in the U.S., including the A3 from Volkswagen AG's Audi unit and BMW AG's 1 series and Mini Cooper.
Unlike traditional compacts these cars can be costly; the Mini goes for as much as $34,000 depending on options.
Daimler's tentative move comes as buyers in Europe and the U.S. are increasingly redefining what they want in a luxury car. The severe economic downturn has driven even affluent consumers toward smaller and more understated models with higher fuel efficiency.
Analysts attribute some of Daimler's drop in global sales this year to a product mix heavy on large luxury models and light on more modest vehicles, compared to, for example, German rival Audi, whose sales have fallen relatively modestly.
Beyond the recession, premium car makers such as BMW and Daimler are eager not to be on the losing end on what many see as a longer-term shift toward more environmentally friendly luxury cars, as more buyers put a premium on clean technology than on horsepower and flash.
"We believe the future customer will continue to want to show some statement" in the luxury car that he or she drives but "the definition of luxury will be somewhat different," Mr. Zetsche said. "It will be fewer CO2 emissions and more modesty in appearance."
Daimler has another motive for introducing small cars, which it already sells in much of the rest of the world: They could help it meet U.S. fuel-economy standards, which are set to tighten in the next few years.
The smaller models, though, could face difficulties in attracting customers. "In the U.S., luxury is still very much equated with size," said Rebecca Lindland, senior auto analyst at IHS Global Insight.
The move wouldn't be the first time Daimler has considered selling subcompacts in the U.S. It planned to import its B-Class that it makes in Germany earlier this decade. But it nixed the decision four years ago as the euro surged in strength versus the dollar, making it difficult to price the car competitively in dollars and still earn a profit.
The currency risk would be a factor this time, too, and could prompt Daimler to shelve the plan, Mr. Zetsche said. But the next-generation Mercedes compacts are based on a less expensive "platform," or underpinings, and will be partially produced at a Daimler plant in Hungary.
Compact premium cars have had a mixed track record in the U.S. Years ago BMW launched a small hatchback called the 318, but American consumers weren't enthused about its four-cylinder engine and the German maker eventually stopped selling the car. Daimler already offers its tiny Smart car in the U.S. yet sales have been slow. But the Mini has been a hit, indicating there is a U.S. market for a stylish, premium-priced subcompact.
If Mercedes joins the field it could hinder General Motors Co. and Chrysler Group LLC. Both were reorganized in bankruptcy and are counting on boosting sales of small cars as part of their recovery. Chrysler alliance partner Fiat SpA plans to introduce sporty small cars under its Alfa Romeo brand. And GM's Cadillac has said it is looking at introducing a small car. All of them would likely compete with any offerings from Mercedes.
Source: Mercedes May Introduce Small Cars in the U.S. - WSJ.com
Related Stories
10/15/2009 01:44 PM: 2010 Mercedes-Benz E-Class Convertible Revealed in Official Design Pictures by Timothy TibbettsNot that the styling of the new Mercedes-Benz E-Class Convertible hasn't been previewed in the virtually undisguised prototypes that have been caught by numerous spy photographers testing in and aroun...
09/15/2009 09:51 AM: Frankfurt Motor Show: Mercedes SLS AMG is the new 'Gullwing' - Telegraph by Bill mccarthy
Gone are the familiar rounded nose, circular headlights and triangular rear quarter-lights of the 1950s model.In their place, the German firm will unveil a chiselled, aerodynamic new model with vertic...
09/10/2009 01:58 AM: Mercedes-Benz plans hybrid super saloon - Telegraph by Bill mccarthy
A concept based on the current S-class will be revealed at this month's Frankfurt motor show and the company says that it plans to add the advanced technology model to the next generation S-class rang...
08/22/2009 05:46 AM: Mercedes-Benz SLC convertible caught in Monterey — Autoblog by Halo
With the Frankfurt Motor Show right around the corner, Mercedes-Benz is putting the finishing touches on its 565-hp, 6.3-liter AMG SLC supercar. A North American media event is likely scheduled for ne...
08/06/2009 03:18 PM: Mercedes C63 AMG Edition 63 by Halo
The special edition Mercedes C63 AMG Edition 63 has been launched this month on the Australian market. The Mercedes C63 AMG Edition 63 is powered by the same 6.2 liter V8 engine developing 336kW and 6...
Post New Comment
