By on March 4, 2013

Mercedes must expand into the smaller segments in a big hurry, never mind the protests from amateur marketing experts that doing so will water down the brand. That brand needs a lot of watering, lest it will shrivel and die. At home in Europe, Daimler’s core customer group on average is around 60 years old. Don’t poo-poo that demographic: There used to be a lot of growth and money in it. However, it is getting frail: The peak of this demographic is soon to retire. Daimler needs to get young stat. Its fountain of youth is a car Reuters dubbed “the last chance saloon” – the CLA.

The car is shown this week at the Geneva Motor Show, as, says Reuters, “a test of Daimler’s ability to shake off a stuffy brand image partly blamed for Mercedes’ failure to keep pace with its two main competitors.”

While the competition is busy and successful in the smaller segments, that growing part of the market has given Daimler nothing but grief. Says Reuters:

“Under Zetsche, who heads both the Daimler group and the Mercedes-Benz business, the company has struggled to rein in undisclosed losses in smaller cars, understood to have reached 500 million euros ($650 million) at the Smart division. The Mercedes A- and B-Class were barely breaking even prior to the smaller model’s relaunch last year on a new front-wheel drive platform known as MFA.”

If the last chance saloon won’t make it, Daimler will be on the way to hell.

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37 Comments on “Daimler Launches The Last Chance Saloon: Heaven Or Hell?...”


  • avatar
    daviel

    Photo, or it did not happen!

  • avatar
    racer-esq.

    The CLA is not for anyone that cares about cars. Price it against Hyundai Genesis Coupe turbo, FR-S, BRZ, Miata, Mustang V6, etc. All with the proper wheels turning. All ready for solo and track days. Or a Ford Focus if you want to talk about something with almost the exact same layout and design, also with European engineering. Hell, price it against the Aston Martin inspired Ford Fusion.

    But I am almost certain that it is going to be the new Mk. IV Jetta for the Lincoln Park Trixie demographic. The only problem is that the 2014 Audi A3 Sedan is coming soon. And looks better. From a hotter brand.

  • avatar
    european

    LOL!

    “never mind the protests from amateur marketing experts that doing so will water down the brand.”

    with that line, Bertel basically bitchslapped Derek.

    haha

  • avatar
    Glenn Mercer

    Here is my amateur marketing expert take. Many years ago a wise person told me that the average consumer had room in his or her brain for one sentence per car brand, no more. Thus, despite all the efforts of all the marketing people and all the TV ads and all the racing sponsorships, it all boiled down to one sentence per brand, each starting with “If I buy this car I will…” Ferrari’s was probably something like “… have more sex.” Lexus’s might be “…show how smart I am.” BMW’s maybe “…drive faster than everyone else.” Subaru’s might be “… show how I love dogs and the outdoors.” Of course, you all get to make up your own versions. The point is, The Sentence overwhelms everything else. You can assert you are “The brand for young professionals who live in the city but love the country and have kids but still like a night out and have money but not too much…” etc. etc. — but you can’t buck the sentence. At least not within a decade and with less than a few hundred million dollars of repositioning marketing spend.

    Okay, so IF you believe this, and IF you believe I am accurate in my thinking for Mercedes’s sentence (“If I buy a Mercedes I will show everyone how rich I am”) — two huge IF’s — then you can see why the brand will always, always struggle with smaller/cheaper cars. Because if the brand image is “I am rich,” then the iconic model is the most expensive one, the S Class (leaving aside pumped-up G-wagens). You walk into a Benz dealership with a pile of cash and ask “How much Merc can I get for this?” Buying anything below the S Class implies “I couldn’t afford the S, so I settled for the C.” The smaller/cheaper the model, the more dissonance with the MB Sentence.

    MB tried to get around this with its implementation of the often-touted but usually-failing strategy of “Go for the high end of each segment.” Thus, it would be okay to sell a compact… if you sold the ritziest and most expensive compact (thus the A Class). This seems to flop because the power of The Sentence seems to overwhelm the alternative explanations of The Segment.

    So, if any of you are still awake after all that exposition, let me close with my belief as to why BMW DOES do better in smaller cars. Because if the BMW sentence is something about “go faster/handle better than anyone else” then marketing smaller cars does not violate The Sentence. Buyers understand that a smaller lighter car can be very quick and can handle well. Thus the iconic BMW is the 3-series, and the 1 can make sense. (And conversely, the 7 always lags the S Class, since the 7 is so large and heavy that it can’t be as quick and agile as the 3, and thus violates The BMW Sentence.)

    The BMW brand pyramid is inverted relative to Mercedes’s.

    Now I just gotta figure out Audi….

    • 0 avatar
      hreardon

      Great analysis there, Glenn, and I’d have to agree.

      As for Audi’s success and what their single sentence would be…I just don’t know. I attribute a lot of their success to timing: they have good product that is distinct looking, a decent value, but more importantly isn’t BMW or Benz.

      The stereotypes of BMW and Benz owners are pretty well entrenched and Audi presents a viable alternative that doesn’t carry many negative brand implications at the moment.

      As Clarkson says, all the cocks have left BMW and now drive Audis….

    • 0 avatar
      danio3834

      I agree. I’ve never considered a BMW less than a 7 series a luxury car. In fact the only thing that ever exuded “premium” to me over the years has been their handling and a good number of their powertrains. To me this is why cars like the 318 seem like the ultimate delusion as the price of entry is relatively high, but you’re left with a car that is outperformed and out classed by cars that cost significantly less money.

      Whatever image this buyer is portraying, it isn’t intelligence or wealth. Anyone who is fooled, won’t be once they climb inside or take a ride.

      Maybe Alfa can capitalize on that market.

      • 0 avatar
        hreardon

        Going back to the earlier post, I think this is a key reason why BMW and Audi have been more successful than MB when it comes to going “downmarket”: they were never seen as being solely in the realm of the wealthy, in the traditional sense.

        These vehicles are a way to attract a larger audience and if you’re lucky, grab those few younger buyers who will stick with the brand as their incomes grow.

    • 0 avatar
      1998redwagon

      audi? i want to hear your explanation for jaguar!

      • 0 avatar
        Glenn Mercer

        My guess for Audi’s sentence is (note I use the word “guess”): “If I buy this car I will have more/better technology than you.” I think Audi has, from Quattro onward, somehow persuaded people that it has better technology than MB or BMW. (Please, before fans of the Teutonic Trio jump on me: I am not saying the reality of tech levels in these cars is higher or lower in one versus the other… just the perception!)

        As for Jaguar, 1998redwagon: Precisely! I think this is Jaguar’s problem, and why Land Rover makes 150% of the profit of Jaguar Land Rover. Land Rover’s sentence is maybe something like this: “If I buy this SUV the world will know I am an intrepid explorer at heart!” (Think Indiana Jones, Stanley, Livingstone; even if the only rain forest an Evoque ever explores is at the local car wash.) But Jaguar’s sentence is… is… what? “Almost as good looking as an Aston Martin, almost as fast as a Ferrari, almost as comfortable as a Mercedes, almost as nimble as a Porsche, almost as much soul as an Alfa…” Beats me. But I think I know this: when a car is 80% as good as an X and 80% as good as a Y and 80% as good as a Z, you don’t get 2.40 times as good as any of them, by adding (.8+.8+.8), you get only half as good as any of them, by multiplying (.8x.8x.8).

        Disclaimer A: I love Jaguar, I am not dissing them, just commiserating.
        Disclaimer B: I know there is no logic at all in the “multiply rather than add” formula, it just always felt right to me: the only brands that dominate are those that knock one key thing out of the ppark. If brands that did many things pretty darn well won, Mazda would be kicking butt all over the USA.

        Suggestion to Jaguar: If I had to stop sniping from the sidelines and actually propose a solution for the brand, it would be “If I buy this car I will exude the heart and soul of Britain.” I would drown Jags in burled wood grown by Druids on Lindisfarne, buy out the 007 franchise product placement rights for all eternity, drape the interior and heck maybe the EXterior in enough leather to send PETA round the bend, put a rack and a free Purdey side-by-side self-opening sidelock in the boot (sic), a cigar humidor and brandy snifter in the center (oops, centre) console, and make Jeremy Irons my spokesperson. Make the thing a rolling St. James men’s club. The Brits OWN trench coats (Burberry…), Scotch (duh), a certain type of men’s tailoring (Savile Row…)… can’t they do this with a car? Damn, I mean, c’mon guys, you let the Bavarians grab Mini and the bloody Saxons have Bentley, at least Jaguar is still inside the Empire, don’t miss this chance!

        (We interrupt this rant to advise readers that Mr. Mercer has been given his medication and is now resting quietly. He has asked his medical professionals to relay to the readers of TTAC who had kind words for his original post, that he appreciates such praise very much, viewing TTAC and its readership as offering the most perceptive automotive thinking in the USA today.) (Oh DAMN what if they are Canadian?)

      • 0 avatar
        krhodes1

        Jaguar is simple. They are sexy, and they are British. All else is completely irrelevant. I don’t think Jaguar competes with the Germans any more than Maserati does. Jaguar has long been the most “affordable” of the exotic cars, with all that goes with being an exotic car. To a large extent, Land Rover is the same. Nobody cares about the running costs of a Ferrari, and similarly Jaguar owners and Land Rover owner’s don’t care either. At least those who buy them new.

        By comparison, BMWs are German Pontiacs, and MBs are German Buicks.

    • 0 avatar

      AUDI’s sentence could be related to having dominated LeMans but probaly more likely to offering the luxurious German alternative to Subaru for those who demand AWD. However, it could be as simple as “the hipper, quieter, more comfortable VW” or “as good as but NOT the establishment (BMW & MB).” Darn, it IS tough to figure them out!

      Nice summation, Glenn.
      Brad

    • 0 avatar
      daviel

      I have always thought that sentence, “!’m rich” for Mercedes.

    • 0 avatar
      George B

      Great analysis Glenn! The one thing I would add is my dad used to be attracted to the Mercedes reputation for big rugged well engineered sedans that stay running for decades, especially their diesel engine models. The problem is current Mercedes sedans fall short of that past reputation for superior quality and longevity.

      • 0 avatar
        blowfish

        yes is very much a catch 22, if u built cars to last then u no need to sell that many, on the contrary if u built cars just last long enuf to finish the W then u are at the expenses of the fine reputation once build.

        us old dudes were sold on them because the car will run forever.
        or anybody would bother to buy a rolex anymore if its going to last 3-4 yrs?
        when i was young people equate of saving $ by buying merc will out last a detroit iron by many more yrs, back then u really know that u’re very blessed by buying a car made during middle of the week.

        look at the value of kinder benzes C klasses or w201 190s.

        • 0 avatar
          hubcap

          “…bother to buy a rolex anymore if its going to last 3-4 yrs?”

          I’m not into watches but I flew with a guy who still had his Rolex Aviator. He purchased it as a gift to himself after finishing flight school.

          That watch survived two tours of flying Huey gunships as well as years upon years of abuse in both the military and civilian world.

          Like I said earlier, I’m not into watches but if I we’re Rolex would be on my short list.

          • 0 avatar
            blowfish

            nowadays rolex has smarten up, about 15 yrs ago they dont sell parts to outside dealers, should your watch died u need to send back to a real dealer ie in canada the only one is in Toronto.
            mines died in the old days it was able to have her repaired locally, and i had to send mines back to TO for quote, in the end I just left her in the bank vault. the reason I dont see spending 3-400 bucks to repair a boat iron to be wore on my wrist, secondly being a submariner the bezel always cut my jacket or shirt cuffs.
            rolex were great time keeper back in the 70s as watches then werent all that accurate, but nowadays quartz electronic watches keep very good time, unless u walk into a nuclear reactor or a nuclear war then your elec watch will go hay wire!
            a fnd visited a nuclear reactor and his watch went all berserk.

  • avatar

    I think they nailed the CLA, and it’s perfect. I don’t think it’s enough.

  • avatar
    Junebug

    My dentist is a succesful guy, his wife has a Phd in chemistry and makes mega-bucks too. So, he can afford any MB, and he use to have a S550 4Matic, sold it and got a BMW – reason being – he said “damn parts were too high and he had other uses for his money”
    So, I conclude, MB better get the quailty thing down or this latest car will be seen as just another lease and forget trinket.

    • 0 avatar
      genuineleather

      Your dentist is offended by MB parts pricing and then buys a BMW? Anyone that price-sensitive would be better off with a Lexus or Acura.

      Or better yet, do what 75% of MB customers do: lease.

  • avatar
    Waterview

    +1 Glen Mercer

    Your characterization of the brand pyramid being inverted is an excellent observation — well said.

  • avatar
    Ihateusernames

    This probably isn’t what MB was going for, but is likely to be my Mom’s next car.

    When she bought her Scion TC she wasn’t exactly what Toyota was looking to do demographically either.

    If the lease rates are around what they are predicted to be, and given her perfect credit, driving record, and the low total miles she drives in a year, the cost of ownership might be in the TC ballpark as well.

    It isn’t as if the Tc has been trouble free or the dealer service (all she will get)has been neither friendly or frugal.

    So has a star on the grill, is the right size and has rear doors to get her granddaughter in an out of, and has the new fangled 4 door coupe styling?

    Perfect for that 60 year old. At least she doesn’t increase the average age.

  • avatar
    gasser

    MBZ bought Smart as a bone to toss to the very influential Green party/ movement of Germany. It was meant to stem harsh environmental criticism of MBZ. It has worked in that role, but it saddled them with an unplanned size car and large losses, because for its size and cost, I consider the Smart car a POS. In the US, MBZ didn’t want it and it was given to Penske to handle USA sales. Now that CAFE rules are tightening, the Smart car has returned to MBZ.

    Here in Los Angeles, there used to be many S class Mercedes, either sold or leased. Lately I see fewer and fewer around. When questioning friends who owned them, several themes recur: problems with the car, either gadgets or mechanicals; competition for the disposable dollars, most usually college tuition; competition from other brands, Porsche Panamera is VERY popular.
    If the CLA sells, it won’t cost MBZ high end sales,, they’ve lost those sales on their own. The CLA will compete with their own C class as well as other “near luxury” cars. The CLA will only impress people in the drive-through line at Jack in the Box, not the owners of the franchise.

    • 0 avatar
      28-Cars-Later

      “The CLA will only impress people in the drive-through line at Jack in the Box, not the owners of the franchise.”

      Exactly.

    • 0 avatar
      genuineleather

      “Here in Los Angeles, there used to be many S class Mercedes, either sold or leased. Lately I see fewer and fewer around.”

      This is partly due to age; the S-class is the oldest offering in the segment and is due to be replaced this year. Despite this and anecdotal evidence to the contrary, the S still handily outsells the 7-series and positively obliterates the A8 and XJ.

      • 0 avatar
        oldfatandrich

        Of course the S outsells the 7 series and the A8. Should that surprise anyone who has compared these cars—or more accurately has the dollars to drive one ? As a consumer in that hateful “65 and rich” demographic, I drive an S (a diesel even !!!) because it is the most comfortable vehicle available at a price point of $100M. When I was younger, I concerned myself with a car’s ability to corner and do jackrabbit starts. Age is unkind in many respects and my S350 mitigates many of its unpleasantness. In the meantime, I have to laugh at the 55ish drivers of 7 series BMWs with their skinny jeans. Act your age, as my dear departed mother once admonished me.

    • 0 avatar
      blowfish

      the other sad reality even mbzs’ dealer cut their older cars adrift, my bro’s 1998 e320 had issues with abs and anti-donut steering abilities went kaplui. their own official service dept didn’t wanna to give him an estimate at all, perhaps worry the old man can trigger a heart attack upon hearing the unpalatable truth.

      my bro does have a money tree grown in his back yard, he has a 2 yrs old turbo 911 as his daily driver and 3-4 yrs old sl550 kind of permanently parked on his drive way, don’t think the car has > 10,000 miles. his reason for driving the e320 is being lower profiled. i was able to get an indy mech to get the abs fixed < 400. i guess similar to dudes who owned 100 f cabin cruiser will have to get ashore on a 10 ft tender or dinghy.
      so merc is losing these kind of deep pocket dudes.
      lots of biz stayed afloat is because of keeping these older customers happy.
      IE Bose speakers who many of u have their system in your prized steed, bose's claim to fame was bose 901, that was started to sell 40 some yrs ago. even today they offer generous trade ins if to buy their new 901.
      and these old dudes will float your boat regardless.
      in reality bose's 901 were not a very good design or u look at why 911 still able to sell like hot cakes after 50 yrs when the engine was placed in the derriere?
      something they have a common trait as they treat their customers right!

  • avatar
    rwb

    For what little it’s worth, I would love an AWD CLAxx AMG.

    No matter how much car I can afford, I will probably always want something small (for weight and ease of parking,) overpowered, and AWD. I’m looking to buy a WRX or STI soon as Subaru is the only option that isn’t a Mitsubishi, but if there were an AMG in this field I would certainly like to own one when I can afford to do so.

  • avatar
    MBella

    I just don’t get all the negative criticism about this car. It hasn’t been released yet. The only one of the new FWD cars that has been out for a year anywhere is the B-Class and the general impressions are pretty positive. The A was just released last September in Europe. Very few people have even seen the CLA yet alone drive it. The time for criticizing this thing will be when it comes out and you can actually drive the thing.

  • avatar
    rdeiriar

    I drove the new A Class, the CLA’s hatchback cousin, last week and i have to say it’s a very impressive car, the chassis is among the best FWD setups i’ve ever experienced. The car is sold out until June at the earliest, so it seems i am not the only one that’s impressed by it.

  • avatar
    stars9texashockey

    I’m no design expert, but I know what I like. The CLA is atrocious looking. It will lease to young women in great numbers. 30 years ago, they would’ve bought Cutlass Supremes.

    • 0 avatar
      Lorenzo

      If you’re right, Daimler has a winner! They need volume and they need a younger clientele. It’s about time Daimler came up with a replacement for their old budget 170.

    • 0 avatar
      corntrollio

      “It will lease to young women in great numbers.”

      Agreed. As I mentioned in prior threads, the advertising may be directed to men, but this will be a women’s car, not that there’s anything wrong with that except that Mercedes is wasting ad dollars.

  • avatar

    The A and B class are un-Mercedes. Not to mention Smart. Why bother making small cars if they lose money in them and dilute the brand? The C-class should be the smallest Benz. Mercedes can’t make money on volume, Volkswagen Golf-style. They can only make money by charging a premium price for a premium product. This “a Mercedes in every garage” thinking is madness.


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