Lieb says small car will fuel Mercedes' growth

Mercedes-Benz USA expects a new family of small vehicles and future derivatives of its compact C-class sedan to drive a 30-percent sales increase in the next five years.

Opportunities for growth are limited for Mercedes' larger E- and S-class cars, CEO Ernst Lieb said in an interview. So the German luxury brand is betting on success in smaller segments in which it doesn't currently compete.

"The potential is there," said Lieb. "Even if the market doesn't grow by a huge rate and stays at 13 or 14 million, the majority of these buyers will be in that lower segment."

Mercedes' U.S. sales are up 26 percent through April to 68,826 units. Last year it sold 190,538 vehicles in the United States.

Mercedes plans a small-car blitz starting in 2012, with three vehicles--a coupe, crossover and sedan--based on a new generation of the B class sold in Europe.

When the redesigned C class launches in 2013, Mercedes will add a convertible and possibly other variants. A coupe based on the current C class goes on sale next year.

"If we want to grow, this is the segment that we have to grow--and below it," said Lieb.

BMW has a 3-series sedan, coupe, convertible and station wagon. So Lieb said Mercedes will have "an opportunity to meet our competitors at their own game."

"Everybody wants to be Mercedes-Benz," he said. "They are after us in the S- and E-class segment. With C class, we're sitting with a four-door sedan and not doing anything else. Now we will go into segments where [competitors] are strong."

The B-class vehicles will be trickiest for Mercedes-Benz. BMW's similar-sized 1-series coupe has not been a hit in this country, and the brand's pricing policy may be one reason. The base 128i starts at about $30,000, about $4,000 below the entry 3 series. But with options such as leather and electric power seats, the 1-series price approaches that of its bigger brother.

BMW sold only 3,648 1-series cars through April.

BMW executives say they aren't pushing 1-series volume with incentives because the car is popular in Europe, where the company can make a bigger profit.

Lieb said Mercedes won't follow BMW's pricing or volume strategies. He expects sales of at least 15,000 for each B-class derivative. Anything less wouldn't make sense for the required investments in training, tooling and marketing, he said.

"We will always have a price premium," he said, "but we can't have a premium like in the S class."

Engines haven't been chosen for the coming small cars, but Lieb said four-cylinders will be available for models derived from the B class as well as the new C-class variants. Mercedes now offers no four-cylinder models in the United States.

Lieb is also confident that Mercedes dealers will be able to sell the B class--especially those who have renovated their stores to comply with the brand's more modern Autohaus design.

"If you take a dealership like we had three or four years ago--and we still have some today with dark wood, carpets and low ceilings--it's a nice ambience but not necessarily youthful and aggressive," said Lieb. "Then you will have a problem because the image doesn't fit the car."

(Source: Automotive News)