Mercedes Chief Sees Potential in $30,000-Vehicle Segment

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New York Int’l Auto Show

NEW YORK – The biggest growth opportunity for the Mercedes brand is in the $30,000 luxury-car segment, Mercedes-Benz USA President and CEO Ernst Lieb says.

“Our average transaction price is about $50,000,” he tells Ward’s during an interview at the New York International Auto Show. “We're clearly No.1 in the market for sales of cars over $40,000.”

Much of this success is thanks to the E-Class and S-Class, while Mercedes’ principal competitor, BMW, sells as much as 60% of its total in 3-Series models that have a much lower price point.

In introducing a new C-Class coupe here, Lieb forecasts the model will eat into sales of competitors such as BMW and Audi, which have a majority of vehicles that reside in the lower-priced luxury segment. “Our future C-Class models will do the same thing (as BMW and Audi),” he predicts.

The C-Class coupe will go on sale in the U.S. in September.

“By extending the C-Class portfolio, we are consciously targeting new customers,” says Joachim Schmidt, head of sales and marketing at Mercedes-Benz Cars. “The new model is youthful, stylish and expressive. What we are offering is an exceptionally sporty way to to enter the world of the Mercedes-Benz coupe.”

Adds Lieb: “Logic is that we have to grow in the $30,000 range, but we only have one model in that range now.” The new coupe aims to help rectify that, he predicts.

However, the A-Class concept recently unveiled won't go on sale here for at least four years. Mercedes wants to gauge reaction to the car in Europe before it brings it to the U.S., Lieb says.

New C-Class coupe aims to help Mercedes compete in $30,000-price range.

Although Mercedes sales are up 10% in the first quarter, the executive doesn't believe the market indicates the recession is over. “The news these days doesn't give me a warm fuzzy feeling.”

But Mercedes dealers are prospering, even though 5%-8% of the retail network is not profitable at this time. “Overall, our dealers are profitable,” Lieb says, estimating dealer profit on sales is a little above that of BMW dealers.

He also says Mercedes currently is working through the transaction necessary for MBUSA to take over distribution of the Smart brand from Penske Automotive. “We have applied for licenses from every state,” although the auto maker doesn't plan to have Smart retailers in every state.

“We're already planning marketing campaigns for Smart,” says Lieb, who is meeting weekly with Roger Penske and Jill Lajdziak of United Auto Group to transition the brand’s distribution.