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Mercedes-Benz has struggled to drive demand for its pricey jelly bean-shaped electric models with an American public not quite ready to ditch the convenience and familiarity of the combustion engine.
The German luxury automaker has gotten the memo.
Mercedes will pivot from pushing electric vehicles in the U.S., the brand's top executives told North American retailers at a three-day event last week in Stuttgart.
Instead, the automaker will be "flexible and tactical" with its powertrain strategy, said a dealer, one of several interviewed who requested not to be identified discussing the content of the internal meetings.
"The American consumer doesn't want to be told what to buy — they want options," another dealer said.
Executives signaled they do not expect the percentage of Mercedes' EV sales in the U.S. to increase dramatically in 2024.
"They're not going to force [EVs] on the market," one of the retailers said. "They are going to allow the market to dictate" what the brand will deliver.
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Mercedes will dial up its combustion engine and hybrid vehicle supply in 2024. The automaker will expand its plug-in hybrid offerings in the second half with the GLC PHEV.
Mercedes told retailers it anticipates selling gasoline-powered models in the U.S. well into the next decade and is committed to investing in V-8 engines, citing "significant demand."
Mercedes-Benz dealer board Chairman Joseph Agresta Jr. described the confab in Stuttgart as an opportunity for retailers to "touch and feel" future products.
"Every dealer body is concerned with this transition to electrification and whether it matches the consumer's pace," said Agresta, president of Benzel-Busch Motor Car Corp., which has two Mercedes stores in New York and New Jersey.
"We've all seen a leveling off to some degree of customer demand for BEVs," Agresta said. "So we should have powertrains that customers want."
Future models will share platforms and support gasoline-only, hybrid and electric powertrains.
Mercedes is "moving to one body style across powertrains," a dealer said, noting Mercedes will ditch the jelly bean design and EQ branding on future EVs.
A Mercedes spokesperson declined to comment on discussions at the event.
Driving growth
Once a U.S. luxury segment sales champion, Mercedes was hobbled by supply chain challenges last year and fell behind Lexus.
But Mercedes is betting a diversified engine strategy, new products and improved inventory will revive its retail mojo in its second-largest market after China.
The brand told retailers it expects to sell about 50,000 more coupes, sedans, crossovers and SUVs in the U.S. in 2024 — an 18 percent increase over the 282,229 delivered last year.
Mercedes will bring 25 new and updated models to showrooms this year, including entry and midsegment vehicles such as the redesigned E-Class and the plug-in hybrid GLC crossover.
Sales should also get a lift as inventory of the high-volume GLC recovers from supply chain bottlenecks last year. A dealer said Mercedes anticipates producing 5,000 GLCs a month for the U.S. "in short order."
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But Mercedes CEO Ola Källenius told dealers the brand is not interested in "chasing a [sales] number." The focus is on profitability and "doing business that makes sense," a dealer said.
Even as supply-driven price wars break out across vehicle segments, the luxury brand plans to maintain its premium pricing strategy. But Mercedes will add more content to its vehicles to improve marketability.
"Mercedes is going to give the consumer more value for their money as opposed to lowering MSRP, which impacts resale value and creates a customer goodwill issue," a dealer said.
Entry-level versions of the GLE crossover and E-Class sedan will be rear-wheel drive to lower the starting price by about $2,500.
Mercedes also wants to drive bespoke sales of its AMG performance line.
"That helps increase profitability and demand," the dealer said. "Most people at that level want to have a unique vehicle that they have customized as opposed to a stock car."
At the meeting, executives addressed the elephant in the room — product quality.
Mercedes ranked 23rd and tied with Ford, out of 33 brands, in J.D. Power's 2023 U.S. Initial Quality Study. Mercedes owners reported 201 problems per 100 vehicles, compared with 189 issues the prior year.
According to retailers, executives said improving quality is the brand's priority.
"Every metric is being looked at, every effort is being made — from design to production — to make sure that the quality matches customer expectation," Agresta said.
It will require a team effort, and dealers have a role to play.
"We've got work that we have to make sure we are doing to take care of the customer when they do have a problem," Agresta said.
What's coming?
In Stuttgart, Mercedes retailers saw or drove more than a half-dozen models destined for U.S. showrooms in the next two to three years.
The smorgasbord of sheet metal included the new electric CLA four-door coupe and G-Wagen SUV; freshened S-Class sedan and GLE crossover; and redesigned C-Class sedan, GLA, GLB and GLC crossovers.
Dealers described the next generation of models as bigger and sportier.
The GLA is streamlined and sports a lower roofline, while the GLB has a squared-off rear similar to the GLS large SUV.
The GLC has a longer wheelbase, while the C-Class bulks up closer to midsize E-Class proportions.
"In a lot of ways, the vehicles look more traditional," one of the dealers said. "The design is recognizable as a Mercedes."
Dealers also previewed a luxury electric passenger van that could be offered in a seven-seat configuration. That vehicle will be built on Mercedes' modular Van Electric Architecture, or Van.EA, which can accommodate midsize to large and private or commercial vehicles. Van.EA production will begin in Vitoria, Spain, in early 2026, according to AutoForecast Solutions.
Il management della divisione statunitense di Mercedes benz ha ammesso che i target per le elettriche erano completamente sballati, punteranno per il 2024 più su plug in e ICE tradizionali. Non ci dovrebbero essere più problemi per la fornitura di moduli ibridi per GLC e Kl. E. Tra i nuovi prodotti in arrivo ci sono 3 compatte (la CLA shooting brake non verrà esportata negli States). Nessuna parola sulla kl. C elettrica che dovrebbe essere presentata a fine 2025.
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