If you need more proof that the auto market is swerving in favor of the premium segment right now, it’s here. Mercedes-Benz plans to cut three 43% of entry-level offerings, while adding an even more exclusive line of luxury vehicles Maybach. The lower segment of the market is simply not profitable enough, so the company is spending more than 75% of its budget on attracting customers with ultra-luxury needs.
This strategy was outlined in a session called “The Economics of Desire” held on the Côte d’Azur. Mercedes-Benz records its change to 2021 sales figures, with record-breaking sales AMG and Maybach models. In its core brand, the flagship sedan S-Class has increased by 40%.
These vehicles, plus G-ClassEQ and EQS, what’s included Mercedes call its “Top-End” category. Using 2019 as a baseline, this team should see 60% sales growth by 2026 if everything goes according to plan. Soon, that will include a series of “ultra-exclusive collectibles” called the Mythos Series. Little is known about the range, but production numbers will be limited and the cars will only be offered to “the most dedicated Mercedes-Benz enthusiasts and collectors.”
Besides, the AMG.EA platform underpinning the Vision AMG . concept will be a key part of the Top-End expansion, as well as limited editions and special collaborations such as the Virgil Abloh Maybach (pictured) in sales of 150 pieces. Mercedes also says it’s looking to develop the G lineup beyond the upcoming electric G-Class.
The next category is called “Core Luxury”, which includes C- and E-Class and their derivative models, as well as Electric Car built on EVA2 (EQE) platform and MB.EA platform. A new E-Class will launch for the first time in 2023 to open the door to this segment.
Finally, and obviously the least, there’s the “Entry Level” category, which now includes Class A cars and crossovers, CLA and GLA. Elsewhere in the world, Mercedes sells the B and GLB-Class, as well as additional models derived from the A-Class such as wagons and hatchbacks. It is not clear who will get the ax, but three of the seven will be scuttled.
Whatever remains will be developed on the compact MMA platform, launching in 2024 alongside the MB.OS operating system. Mercedes-Benz plans to go all-electric with new car sold by 2030 “wherever market conditions permit” and has “ambition to become CO2 neutral by 2039,” according to a press release.
The change in strategy is a departure from the company’s previous market share approach that spawned models like the CLA. We’re seeing brands specialize as they venture into electric and possibly autonomous vehicles of the future. As cars converge on features and features, companies will have to depend on other traits, like branding and exclusivity, to stand out.