Mercedes-Benz Weathered Hard Times Better Than Other Lux Brands?

June 16, 2010
The hybrid SUV delivers city fuel consumption of 21mpg (11.2L/100km) and highway consumption of 24mpg (9.8L/100km)

The hybrid SUV delivers city fuel consumption of 21mpg (11.2L/100km) and highway consumption of 24mpg (9.8L/100km)

The housing bust and the recession have hit some areas of the country harder than others. And because some vehicles play better (or worse) in Peoria than in Parsippany or Portola Hills, it's affected the auto industry in some substantial ways. And Mercedes-Benz considers itself lucky to be strong in a few places that weren't affected as severely.

"The Northeast is the workhorse of the market" for M-B, says Steve Cannon, VP of marketing for Mercedes-Benz USA, and especially strong for the E-Class, while the S-Class and SUV models have done surprisingly well in the Southeast. Those areas weren't hit as hard by the housing bust and lending crisis as California.

"People were tapping home equity for vehicle purchases" in California especially, explained Cannon. "That as a source of income is gone…but the natural market is still there."

What's the natural market? Cannon says that, even with the recession, it's the market for traditional, conservative luxury vehicles that serve a specific purpose—namely the Mercedes-Benz E-Class, the M-Class, and the GL-Class. That portion of the market has stayed relatively strong and isn't going to sag anytime soon.

Models like the Mercedes-Benz SLK roadster haven't done nearly as well in the recession. The SLK models, as well as the SL, are "boom toys"—less functional and bought for fun—says Cannon, but in the bust, they're much more likely to get crossed off the list.

This year to date, compared to last year, Cannon says that SLK sales are down about 30 percent. And looking at Automotive News sales numbers, the SLK, at just 2,566 sales for calendar-year 2009, sold nearly half as many as for CY 2008 and less than a quarter as in 2005, right after it was last redesigned. Cannon concedes that it's getting near the end of its lifecycle.

In looking at last month's sales results, the recession "boom or bust" generalizations hold: The Mercedes-Benz CL-Class, SL-Class, SLK-Class, and CLS-Class are all down between 33 and 47 percent, while nearly all other models are up versus last year.

2010 Mercedes-Benz SLS AMG

2010 Mercedes-Benz SLS AMG

But even sales of the toys are showing signs of rebounding. Mercedes was able to sell 168 of its 2011 SLS AMG sports cars in May—more than expected, and more than was sold under the entire Ferrari model range. With a redesigned 2012 Mercedes-Benz SLK expected, the timing is right.

Product launches might have also been one of the keys as to how M-B weathered the recession so well. Several of those "natural" models were refreshed or redesigned during the recession, making them even more appealing.

BMW's timing for product rollouts didn't work out nearly as well, with several "boom toys"—including a redesigned BMW Z4 and new BMW 3-Series Convertibles—going on sale during the recession. For May, Mercedes-Benz was up 22 percent year over year, he says, with BMW only up three percent.

"The timing has worked out a lot better," said Cannon. "It's been more consistent with the Zeitgeist, post-recession."

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