Mercedes Adopts Dual Strategy for E-Class

ST. HELENA, CA – Up to 70% of ’07 E-Class sedans sold in some U.S. regions will be Sport-trim models, as Mercedes-Benz adopts an aggressive dual strategy to satisfy luxury and performance-oriented buyers.

“Out of the gate, we’re a little heavier on the luxury side – just because that’s where our customer has been thinking,” says Bart Herring, Mercedes-Benz U.S.A. product manager for the brand’s E, C, S and CLS-Class passenger cars.

The tri-star brand is taking a page out of the Lexus playbook as it seeks to regain U.S. luxury market leadership from Toyota Motor Corp.’s top-end brand.

With its comfort-oriented ES and sporty IS cars, Lexus is broadening the appeal of its entry-level luxury offerings. “They were actually out with the ES and the IS, and we had something in the works at the same time,” Herring says.

The “something” was the sporty C-Class, released in 2003.

“It was just some aesthetic components,” he says. “We have morphed that into a serious sport package (with the E-Class).”

The E-Class Sport, which officially went on sale this month, sits about 1.5 ins. (3.8 cm) lower than its lux-trim sibling. It also features cross-drilled front-disc brakes and silver 4-piston fixed front calipers, 18-in. wheels with 10 twin spokes, blue-tinted glass, LED taillamps and chrome detail around the fog lamps.

The car’s grille is larger on both trims, but the sport model gets black inserts. Both trims also benefit from steering tuned 10% tighter than the ’06 E-Class.

In contrast to the traditional burl-walnut trim on the luxury model’s interior, the sport model features a black-finished birds-eye maple, which is offset by an instrument cluster with white gauges. In addition, it features two new interior accent colors: cognac brown and Sahara beige.

While Mercedes expects a 50:50 nationwide ratio of luxury to sport, Bernhard Glaser, general manager-product management, says the auto maker is prepared to meet demand for a 60:40 split in favor of the sport.

E-Class Sport features 18-in wheels with 10 twin spokes.

The West and Southeast, he adds, are expected to see the sport model account for 70% of E-Class sales.

In addition to a lower suspension and more direct steering, the E-Class Sport models – particularly the E550 – feature a gutsy exhaust note inspired by Mercedes’ high-performance AMG lineup and accentuated by dual chrome tips.

“When you’re not hammering (the throttle), it’s comfortable,” Herring says, referring specifically to tone of the E550’s new 5.5L V-8, which generates 382 hp, a 26% jump from the engine it replaces. But we think, when you get into (the throttle), you probably want to hear it. That’s the way it should work, without being overdone.”

The new V-8 also generates peak torque of 391 lb.-ft. (530 Nm), a 15% hike from the previous powerplant. The E350 is powered by a 268-hp V-6 with top torque of 258 lb.-ft. (350 Nm).

Most telling about Mercedes’ determination to get the attention of enthusiasts is the car’s starting sticker. The E350 sedan bases at $50,050 for both trims, so there is no penalty for choosing sportiness over luxury.

The E550 sedan starts at $59,000, while the E320 Bluetec diesel – due in October – begins at $51,550.

The high-performance E63 AMG, which went on sale July 24, will have a base price in the mid-$80,000 range. It features the first AMG engine developed specifically for Mercedes’ performance brand, a 6.3L V-8 that generates 507 hp – 8% more than the engine it replaces. The powerplant puts out peak torque of 465 lb.-ft. (630 Nm).

All E-Class models feature a 7-speed automatic transmission. The E320 Bluetec and E350 have steel-spring suspension, while the higher-end models feature Mercedes’ Airmatic adjustable transmission.

Mercedes rules out offering Airmatic as an option on the E350 because of pricing pressures.

“(The E350) customers aren’t just going to add Airmatic,” Herring says. “They’re going to add Airmatic, ventilated seats…all this stuff, and then they’re shaking hands with the 550. So at that point, that’s where that customer goes. And from a manufacturing standpoint, you can’t build every car for every person.”

Unique to E-Class Sport is interior color Mercedes calls Cognac.

Further reducing manufacturing complexity, while offering more value, Mercedes adds $2,750 in new equipment, yet the ’07 base sticker remains unchanged from the ’06 model year.

The ’07 E-Class standard equipment list now includes a sunroof, a premium Harman Kardon sound system, 6-CD changer and Mercedes’ trademark Pre-Safe crash-mitigation system.

Pre-Safe, which migrates from the S-Class, integrates seatbelt tensioners with a mechanism that automatically moves the front seats to the optimal position for absorbing impact. The system is activated when sensors determine the vehicle’s attitude suggests a pending collision.

Mercedes puts a finer point on the E-Class target customer by dialing back on the number of other variants.

“This year, we actually dropped the 2-wheel-drive V-6 and the 4-wheel-drive V-8 in the wagon,” Herring tells Ward's.

For more than a decade, the E-Class has been a top-seller for Mercedes in the U.S., along with the C-Class. Through June, E-Class sales were up marginally compared with like-2005. But the car still trails the Cadillac DTS, BMW 5-Series and fleet-heavy Lincoln Town Car.

Related document: Ward's U.S. Sales by Segment – Q2 2006

However, Herring expresses confidence the current sales trend will surge once the new car arrives on dealer lots. “We’ve sold out this month,” he says. “And we’re probably sold ahead the next 90 days, at a minimum.”

Dieter Zetsche, head of Mercedes Car Group and chairman of parent DaimlerChrysler AG, vowed in January to return the brand to the top of the luxury market.

Through June, Mercedes sales were up 16.1%, but its 1.4% share of the market – while growing – still trails BMW’s 1.9% and the 1.8% held by Lexus.

Related document: Ward's U.S. Light Vehicle Sales – June 2006

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