Mercedes Casts Doubt On A-Class Future As It Chases Profit, Not Volume | HITECHGLOBE

Mercedes Casts Doubt On A-Class Future As It Chases Profit, Not Volume

adminMay 10, 20225min31
adminMay 10, 20225min31
Mercedes-A-Class-Sedan-1.jpg


It was only last month when Autocar reported on the uncertainty of a next-generation BMW 1 Series and now it’s doing the same with its archrival. Indeed, the future of the Mercedes A-Class also looks grim, according to a statement made by Mercedes CEO Ola Källenius today. The British magazine cites the company’s head honcho speaking during the Financial Times’ Future of the Car Summit about the product lineup.

Full details regarding the portfolio will be disclosed next week during a meeting with capital investors. However, the Swedish executive suggested compact cars are not a priority for the three-pointed star. Rather than chasing volume with models like the A-Class and its many derivatives, it wants to focus on bigger and more expensive vehicles. Why? Because these have substantially higher profit margins.

For the very same reason, the limited supply of semiconductors has been primarily directed to C-Class models and upward since these are the moneymakers. Källenius said Mercedes had taken the decision to “chase value for our customers and company” instead of going after volume even before the chip crunch. The supply constraints have been a blessing in disguise to some extent as it proved to the German luxury automaker it could focus more on the high-end models.

Mercedes A Class Sedan 2 830x623

“We had already started taking actions in our channel management to make sure we watched the quality of our margins and pricing power – and in that regard, the supply constraints have been like an unwanted experiment. And it’s true, you can see the profitability has been very robust during these times.”

The A-Class is not just one model as it includes a whole family of compact cars. We’re talking about the normal A-Class hatchback, A-Class Sedan, and the CLA serving as a sleeker sedan to rival the BMW 2 Series Gran Coupe. In addition, Mercedes makes and sells a long-wheelbase A-Class Sedan in China where it competes with the BMW 1 Series Sedan.

Then there’s the CLA Shooting Brake, which is essentially a stylish wagon without a direct rival in the luxury segment. Rounding off the list of models are the popular GLA compact crossover and the 2 Series Active Tourer-fighting B-Class minivan. Earlier this year, Mercedes announced it would discontinue the A-Class Sedan in the United States after the 2022 model year. That’s not to say every single compact car will be phased out after the current generation, but don’t be too surprised if some of these entry-level offerings will get the proverbial axe.

As a final note, Audi has already announced the subcompact A1 and Q2 will not live to see a next generation.

Source: Autocar



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