Affordable CLA Model Will Be Key in Mercedes-Benz Turnaround

FacebookTwitterLinkedIn

At the end of Mercedes-Benz’s Super Bowl commercial, the price of the new CLA sedan was revealed on a billboard as $29,900.

The moment was more than a punch line that allowed the hero of the ad to believe maybe he didn’t need to sell his soul to the Devil to enjoy the high life. It also was the climax of a three-year effort by top executives of Mercedes-Benz USA to get parent Daimler AG to agree to field the new model at a price point below the $30,000 level that the Americans believed would be important to encourage interest among the 30- to 40-year-olds who would be the target for CLA.

Now that the car itself is being unveiled at the Geneva auto show this week before it goes on sale in the U.S. in September, Steve Cannon, CEO of Mercedes-Benz USA, is more than happy to relive what he believes will become a significant turn for the brand in the increasingly important American market.

[more]

“It was a phenomenal accomplishment that we ended up getting the pricing we asked for,” Cannon told Automotive News. “Germany knows we are trying to open our brand and we are trying to get younger buyers. You can have great styling that speaks to them. But if you do not bring your transaction price to the point where they can reach your brand, you aren’t going to accomplish your objective.”

The C250 is Mercedes’ current entry-level vehicle in the U.S. and it’s priced at more than $36,000. Cannon and colleagues believed they needed the CLA’s sticker price to come in at least $5,000 below that level so there would be no cannibalization and so that they’d have a legitimate shot at dangling the brand’s iconic association with aspiration in front of older Millennials and younger Gen-Xers.

It’s the kind of association that the brand is still celebrating, in fact, with promotions such as its honoring of the 50th anniversary of its famed “Pagoda” model, the SL, at the Amelia Island (Fla.) Concours d’Elegance this week. It was a half-century ago this month that the Mercedes-Benz 230 SL two-seater Coupe/Roadster was introduced at the Geneva auto show, this year’s version of which is unfolding now.

Anyway, in battling for a sub-$30,000 CLA, the Americans had several factors going for them, including the fact that embattled Daimler CEO Dieter Zetsche could use a big product win to reverse the company’s sagging fortunes, as well as the fact that the CLA is being built at a factory in Hungary where labor costs are lower than in Germany and at a plant that is using cost-saving flexible architecture.

Expectations for CLA sales are huge, and not just in the U.S.: Mercedes is counting on the car to help it correct Zetsche’s botched expansion in China and to give the brand a fighting chance to battle BMW and Audi for global premium-segment sales leadership in the years to come.

At the Geneva show this week, Mercedes also highlighted that it will begin selling CLA first in Europe, next month. Response of upscale consumers there will give Daimler executives an inkling of the ultimate global response to the new reasonably priced sedan, but sales in the U.S. and China will determine whether it succeeds—and perhaps, in some significant way, whether Zetsche does too.

FacebookTwitterLinkedIn