2 February 2024
A-Class drove much of Mercedes’ volume growth over the past decade
German giant to focus on profitability rather than volume following strategic about-turn
The battle between Mercedes-Benz, Audi and BMW over the past decade to claim the title of the world’s best-selling premium car maker was a compelling one as the trio raced to – and then passed – the two-million-cars-a-year threshold.
Now the race is over. In 2023, BMW was more than 350,000 sales ahead of Audi and 200,000 ahead of Mercedes-Benz, pushing back towards 2.5 million units. Yet only one of those brands on the podium is likely to be disappointed.
While Audi has fallen behind off the back of the chip shortage and a slow rollout of electric cars, Mercedes has completely changed its business to focus on profitability rather than volume.
Much of the growth of the past decade was driven by the entry-level A-Class and its seven siblings from the MFA platform.
The UK is a microcosm of its success: in the third-generation A-Class’s first full year on sale, in 2019, Mercedes was the UK’s third-largest car brand with more than 170,000 sales. Following the strategy shift and along with a move to the agency sales model in 2023, Mercedes sold 87,000 cars in the UK.
Yes, the economy and market conditions have also changed, but the £199-a-month A-Class deals we came to know in the pre-Covid volume days are now £299 per month with a much bigger deposit to boot.
Yet a regular fixture at the top of the UK’s best-selling car charts is soon to be no more.
The replacement for MFA – MMA – will underpin just four models, and the entry-level car will no longer be the A-Class but the next CLA, which, Mercedes technical boss Markus Schäfer told me at CES last month, is “moving a notch up” in the segment. It is “going in the opposite direction” – away from making cars smaller and more affordable, and the same goes for the other planned MMA models, the EQA, EQB and CLA Shooting Brake.
Schäfer was emphatic that the CLA will remain “the gateway into the brand” and Mercedes will not waiver on its approach. Indeed, having seven, smaller entry-level models on one platform is not right as “we are not a volume producer”.
He added: “We’re doing entry vehicles, and offering the complexity of seven vehicles. You can imagine how small the individual amount [profit] is off each of these vehicles. Then these cars are not unfortunately for the worldwide market.
“I know they are popular and there are so many fans of the A-Class, but it’s not a car for the world, a car that China takes as the biggest market in the world.
“It’s very hard to build a business case living up to the quality standard we want to live up to – and we have to live up to – by putting all this content in a car. It can’t be a naked Mercedes. So if we want to live up to our promise of delivering the content and the quality to a car, the appeal, then we are absolutely niche. That’s why we had to slim down the portfolio and unfortunately take the decision to delete the A-Class.”
Statements such as ‘profits over volume’ are commonly spoken in the automotive industry, yet come month end, with targets to hit and factories that need to keep turning, old habits of chasing volume usually always die hard. Just not at Mercedes.