Mercedes-Benz focuses on luxury cars to boost profits
Mercedes-Benz has plans to reshape its product range to focus on luxury in a bid to boost its profits. Announced at a strategy update called ‘Economics of Desire’, it outlined Mercedes-Benz’s future as a ‘pure-play luxury car company’, which could see it ditch smaller models from the A- and B-Class ranges.
The German manufacturer will recalibrate its portfolio and allocate more than 75% of its investment towards its most profitable market segments. This will help in its aim to increase the sales share of its ‘Top-End’ vehicles by around 60% in 2026 compared with 2019 levels. The goal is to improve its operating margin to 14% by 2025.
This focus ‘should enable the company to deliver a strong financial result even under more challenging market conditions’ according to Mercedes-Benz’s statement. The brand is also sticking to its ambition to become fully electric by 2030 where market conditions allow, and become carbon-neutral by 2039.
‘Top-End Luxury’, ‘Core Luxury’ and ‘Entry Luxury’ are the markets the brand will continue to focus on, with the first encompassing Mercedes-AMG, Mercedes-Maybach, S-Class, G-Class, GLS and limited or exclusive models. Core Luxury includes the C-Class and E-Class derivatives, which will soon sit on the EVA2 and MB.EA electric platforms. Entry Luxury will be a redefined entry point to the brand, with a reduced number of model variants (from seven to four), while ‘significantly elevating the technological substance of these products.’ It teased that its first MMA platform model in this range will show the way forward and will be the launch car for its new MB.OS operating system that’s set to replace MBUX.
The buying experience will also change, with an emphasis on improving direct online sales, which the brand estimates will make up more than 80% of European sales by 2025. It will also create dedicated ‘Brand Experience Centres’ for its Top-End luxury vehicles and reduce the number of individual options available, instead bundling them into equipment packages based on preference and the region where the car is sold. According to Mercedes-Benz, this ‘simplifies and speeds up online configuration and also leads to a faster and higher level of availability, as well as a significant complexity reduction for the company. The grouping of option packages is expected to also have a positive effect on residual values as a higher level of equipment is also available for base variants.’