Mercedes-Benz Abandons Luxury Strategy Following Sales Decline
STUTTGART, Germany – Mercedes-Benz is reversing course on a strategy launched in 2022 to position itself as a purely luxury brand, opting instead to pursue a broader market approach with premium vehicles across all price categories. The shift comes amid declining sales and a notable drop in profits, with the company being the only German automaker to experience sales declines in major markets this year.
The “luxury strategy,” which proved controversial internally, led to what one automotive industry analyst described as a “weakening of the group’s market share due to astronomical prices.” In the first nine months of 2023, Mercedes-Benz’s profit before interest and taxes decreased by nearly 60 percent compared to the same period in 2022.
Company sources indicate the decision to abandon the luxury focus has been finalized, with implementation now underway. Mercedes-Benz intends to return to its “old” values, emphasizing conventional car design and a new brand promise encapsulated in the slogan “Welcome Home.”
The change in direction was previewed at the recent international motor show in Munich, where Mercedes-Benz signaled its intention to introduce an entry-level model. This model is expected to be priced and styled similarly to the current A-Class,but will be produced in Kecskemét,Hungary,where production costs are 70 percent lower than in Germany.
The CEO’s aim is to attract younger customers while ultimately achieving higher prices, avoiding a prohibitive starting price for the new entry-level vehicles.
