Mercedes Looks to New Products to Stay on Sales Roll

NEW YORK – As Mercedes-Benz prepares to launch its B-Class electric vehicle later this year, the automaker is confident the car will avoid the fires caused by lithium-ion batteries that beset Tesla S models throughout 2013.

Steve Cannon, president of MBUSA, tells WardsAuto that even though the B-Class uses the same EV powertrain as the Tesla S, Mercedes’s original engineering design will preclude battery-fire problems. The B-Class EV’s battery pack is located underneath the vehicle floor between the front and rear wheels.

“We don't need to do extra engineering (to prevent the fires),” Cannon says. “We're looking forward to getting into the electric game. We're going to be very careful with this vehicle.

“Some of what Tesla has done will benefit us,” Cannon adds, but notes it's a price-sensitive area: “People aren't willing to pay more (for EVs).”

Smart, like Mercedes a division of Daimler, already sells an EV.

“There's going to be a slow, steady uptake of EVs,” Cannon predicts. Even though archrival BMW is preparing to introduce two new EVs in 2014, “I don't see it as duking it out with BMW,” he says.

Mercedes will not mention its use of the Tesla powertrain in the B-Class EV. “We have an ownership stake in Tesla, but the B-Class is still a Mercedes product,” he says.

Mercedes is coming off its best-ever sales year in the U.S., up 14% to 312,534 units, narrowly squeezing past BMW, which finished with 309,280. Mercedes lags BMW in sales at the lower end of the portfolio, but does much better than its German rival at the top end – especially the E-Class and S-Class, compared with the 5-Series and 7-Series, respectively.

Cannon says it's irrelevant whether Mercedes is the luxury-segment sales leader and outsells BMW, but finishing north of 300,000 units for the first time in the U.S. nevertheless marks a significant milestone. He's confident Mercedes can maintain its sales momentum throughout 2014 thanks to a continuing new-product blitz.

“All of our planets are aligning,” Cannon says.

The automaker has done a good job of pre-marketing its new entry-level model, the CLA, which is priced just below $30,000 but is transacting at about $34,000, he says.

In its first month in the U.S., Mercedes had a phenomenal start with the 4-door sedan, selling more than 5,000 units in October. Demand tailed off in November, but Cannon predicts CLA sales will level out at about 3,000 per month this year. Demand could exceed that, but the sedan is so popular globally that the automaker’s U.S. arm will face supply constraints.

MBUSA is paying close attention to CLA buyers because almost 75% are new to the Mercedes brand. “We're being conscious of how we spec the early cars,” Cannon says.

Unlike BMW and Audi, Mercedes does not offer free maintenance for new-car purchases. Cannon is proud of the fact Mercedes hasn't had to do this while maintaining its record-breaking sales pace. Mercedes does offer an assortment of prepaid plans to cover maintenance so owners can making upkeep less expensive than conventional pay-as-you-go costs.

About 50% of Mercedes customers purchase these plans.  “The last thing we want is sticker shock for maintenance,” Cannon says.

Mercedes’ new products include vans. Cannon has promoted marketing vice president Bernie Glaser to head up van sales in the U.S.

Glaser says a downsized version of the Sprinter van, now sold in Europe as the Vito, will debut in early 2015. It will come in both cargo and passenger models and will compete with Ford's Transit Connect and Nissan NV200.

The baby Sprinter initially will feature a “very fuel-efficient” 4-cyl. gasoline engine, but Mercedes also is looking into a diesel option, Glaser says.

The U.S. is the second-largest market for the fullsize Sprinter. Mercedes also plans to introduce the Vito in China, where it will be locally produced.