Mercedes CEO Wants To Focus On Wealthy Car Buyers

Oct. 10, 2020 7:15 AM ET by Jay Traugott Industry News / 12 Comments

The German carmaker's affordable models will start to be phased out.

Like all automakers, Mercedes-Benz is being forced to reevaluate many things in this coronavirus-hit world. Earlier this week we reported about the German automaker's plans to fully embrace electrification for its Maybach and AMG brands while longtime mainstream models like the Mercedes C-Class Coupe and E-Class Coupe have no future (and neither do manual transmissions). In their place will be more EQ-branded all-electric models riding on their own unique platform.

The Mercedes EQS, an S-Class-sized luxury sedan, will arrive next year followed by the smaller EQE sedan and full-size EQS SUV. But there is something else Daimler CEO Ola Kallenius hinted to investors: compact models like the Mercedes A-Class and overseas-only B-Class are not part of the company's future.

2020-2021 Mercedes-AMG A35 Front Angle View

2020-2021 Mercedes-AMG A35 Rear Angle View

Reuters reports that Kallenius specifically stated these models are "not where the main thrust should go, we should not become a competitor of the volume makers. The premium luxury segment usually has above-average growth."

What's ironic is that both models played a key role in rejuvenating the brand by attracting younger buyers. The A-Class sedan in particular has done its job very well.

Kallenius is saying that its lineup of smaller vehicles, which also includes the CLA sedan and GLA and GLB crossovers, is not where Mercedes should focus future resources. Now, does this mean the A-Class sedan and, possibly, the CLA, GLB, and GLA are on their way out?

Considering all are relatively early in their respective product life cycles the answer is probably not immediately. Years of product development expenses would go down the drain. But Kallenius does intend to put the emphasis on high-end versions to increase profit margins. A base price $32,000 A-Class sedan isn't exactly very profitable, but the AMG A35 high-performance version certainly is, beginning at $45,000. Still, the writing is on the wall here regarding Mercedes' long-term plans under Kallenius.

Electrification, ultra-luxury, and other mobility technology advancements are in while smaller and more affordable models are out.