***Mercedes-Benz sales outlook is optimistic, but realistic

Mercedes-Benz USA CEO Paul Halata isn't making any promises about sales figures for 2001 and into next year, saying the events of Sept. 11 have thrown everyone for a loop, including the U.S.'s best-selling luxury brand.

“We've got to be realistic; the world's changed, the market's changed. If we take October out of the equation with all the incentives running by the Big Three, you don't have that much going on in the luxury car end. We are a little more cautious and conservative from where we want to be.”

Yet he says MBUSA by October was ahead of last year's figures and “exactly where we wanted to be,” despite the 8.6% sales decline for September compared to year-ago.

“Taking September into consideration, I think I would not be the only one to say it's changed the dimension of the market. It's changed the dimension of not only the market, but the market place and the way business is being conducted right now,” he says.

Mr. Halata says showroom traffic at Mercedes dealerships has increased on the West Coast and in Florida following the attacks, and even in the Northeast, the region hit hardest by falling auto sales. A dealer in northern New York reported he had more activity in the second week of October than in the previous 12 months, he says.

Mercedes is currently drawing a younger generation with its new entry-level C-Class Coupe, the C230, with a base price of $25,595.

“We have a lot of females, a lot of younger people coming into the brand. We're also seeing the Coupe as a second-car in the family,” says Mr. Halata.

He adds many parents are considering it for their children and not for themselves, a turning point for Mercedes.

Since it went on sale in July, the C230 has sold 3,021 units as of the end of September and with greater availability Mercedes expects annual sales of 12,000-15,000 units. In the not-too-distant future Mercedes will move even further down-market with the introduction of the A-Class, an under-$25,000 model currently available in Europe.

“It is an import and an addition to the Mercedes-Benz brand, not because of the price but rather the design and the size of the engine and the concept we have established,” says Mr. Halata.

He says DaimlerChrysler executives in Germany feel strongly about bringing the car to the U.S., but not until the next generation launches in 2005.

However, Mercedes has received criticism both here and abroad for reaching too far down-market, says analyst Dave Andrea of the Center for Automotive Research (CAR) in Ann Arbor, MI.

There's a conflict between boosting sales and protecting the brand's exclusivity, he notes.

But Mr. Halata says, “We have the most versatile portfolio and we literally serve everyone in the luxury car segment. I think in times like we've got today we offer people choices that no other brand has.”