Mercedes Makes Niche Markets Strategic Focus
By Eric Mayne WardsAuto.com, Jan 14, 2008 5:25 PM

DETROIT – Sportiness and utility are the themes behind Mercedes-Benz Cars’ nine global product launches planned for 2008.

With the new C-Class contributing to the sales momentum begun by the redesigned ’07 S-Class, the auto maker is striving to “open up new market niches,” Daimler AG Chairman and Mercedes division chief Dieter Zetsche says at the North American International Auto Show here.

New are the CLC coupe, derived from the redesigned C-Class and destined for markets outside North America; two iterations of the next-generation SL roadster – an SL 550 and AMG SL63 – plus the GLK compact cross/utility vehicle unveiled at the show in concept form as the Vision GLK. Meanwhile, the M-Class CUV gets a facelift.

Last year’s strong sales give Mercedes the confidence to splinter its approach to the market, as the auto maker clings to its goal of achieving a 10% return on sales no later than 2010, Zetsche says.

Globally, deliveries rose 3% last year, compared with 2006, he says, adding the U.S. market was a key contributor as the auto maker recorded its 14th consecutive annual sales increase.

However, 15 years “would be more impressive,” Zetsche jokes.

Mercedes enjoyed a 7.1% U.S. sales jump last year, with 335,840 deliveries, according to Ward’s data.

Vision GLK concept among Mercedes’ niche plays.

Klaus Maier, executive vice president-sales and marketing, says niche markets portend healthy returns despite their inherent low volumes.

“The roadster segment is very profitable,” he tells Ward’s.

On the high-volume side, Mercedes promises facelifts for its A- and B-Class cars, primarily sold in Europe.

Meanwhile, Mercedes is struggling to understand why it finished poorly in a recent Consumer Reports survey of brand perception.

Despite industry data that places the auto maker among the top performers, Mercedes finished near the bottom of CR’s random survey that began with the question: “When you think of cars available for sale in America, what cars do you think of?”

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Subsequent questions explore associations between brands and attributes, such as quality.

“It doesn’t make sense to us,” Zetsche tells Ward’s. “Our own warranty costs are down in the basement.” Mercedes warranty expenditures are less than half of what they were a year ago, he adds.

To reconcile reality with public perception – a lag the survey demonstrated with regard to Honda Motor Co. Ltd.’s Acura brand, which finished dead last – Maier urges patience.

Acknowledging past quality problems at Mercedes, Maier says reputations have to “recover.”

“You cannot argue or market or communicate quality by itself,” he says. “It comes with the experience of owning the car. So we work all around the world and continue to improve on the dealer side.”

Zetsche says Mercedes has “no indication” its reputation was hurt due to its close association with Chrysler products – a 10-year tie-up that ended last year when Cerberus Capital Management LP acquired a controlling interest in Chrysler operations.

emayne@wardsauto.com