Mercedes Benz and its small-car dreams

Posted by: David Welch on November 13, 2009

2009-Mercedes-B-Class.jpg

American seems to be obsessed with small cars these days. Not American consumers, mind you, but policy makers and executives at the companies who must bend to their will. First, we had General Motors and Fiat-Chrysler rushing small cars to market as part of their argument for federal assistance earlier this year. Ford has a few of them coming in response both to high fuel prices and new fuel economy rules. Not to be outdone, Daimler AG CEO Dieter Zetsche says Mercedes may export some small cars to the U.S. Luxury buyers still want luxury, he told the Wall Street Journal, but some may want to make a less ostentatious, low-carbon dioxide statement.

This is wrong on so many levels. The article says that the Mercedes compacts will take on the Audi A3, BMW 1-series and BMW’s Mini Cooper brand. As for the A3 and 1-series, yes the Baby Benz will take them on, battling for all 12,000 cars worth of sales that the two models have sold this year. That’s right. Audi has sold about 2,900 copies of the A3, one-tenth the sales of its A4 sedan. The 1-series has done a bit better, selling almost 9,500 cars. That pales next to 3-series sales of 75,500 cars. Even if Mercedes gets a piece of that compact luxury biz, it will be small potatoes. As if Mercedes needs another model that sells fewer than 10,000 cars a year. The company has about half a dozen or so right now. By the way, Mercedes once shelved plans to bring its small B-class (pictured above) to the U.S. because of currency problems. Well, the dollar is still pretty weak. That will make the car either expensive to buy for consumers or profit-challenged.

And what about taking on Mini? The brand has sold almost 40,000 cars through October and just keeps growing. But it has everyone fooled. First of all, the brand has an incredibly unique image that blends modern technology of BMW’s vaunted engineering with the British styling and heritage of its past. And it is quirky. Mini stands alone unlike any brand in the car market as accessible exclusivity, though not traditional luxury. Will its buyers look at a Baby Benz? I doubt it. One BMW marketer once told me that in their research, they found that Mini owners view BMW owners the way most people view Ferrari owners. Loosely translated from the original profane description, Mini owners seem them as men with more money than confidence. I doubt Mini owners will see the Mercedes brand any differently.

I’ll give you one more practical reason why small cars won’t sell as fuel savers or as a green statement. Take a four-cylinder Chevrolet Malibu. It gets 26 miles per gallon combined and costs $1,526 a year to fuel up. A compact Chevy Cobalt gets 27 mpg and costs $1,482 a year at the pump. Who will sacrifice the passenger space of a Malibu to save $44 a year in gas? Answer: The buyer who can’t afford the Malibu.

Translate that to the luxury market where buyers are less concerned about gasoline prices, and there is even less incentive to go small. As for the low carbon statement, that won’t wash either. By the time Mercedes gets its compacts to the U.S., there will be Chevy Volts, plug-in Priuses, Fisker plug-in hybrids, Tesla electric sedans and plenty more expensive greenery for well-to-do do-gooders. Isn’t this idea just a wee bit silly?

Reader Comments

Doug Terry

November 13, 2009 1:41 PM

Just about every car reviewer in the US downgrades the chances of small cars making it big. The problem, however, is the past: American consumers were consistently offered lousy little cars by an industry in Detroit that didn't want to make them and believed that no profit could be made by smaller cars. I call these cars the LPJ models: little pieces of junk.

Back in the late 1980s, both Cheverolet and Toyota put out essentially the same small car, through a joint manufacturing agreement. The Toyota (the early Corolla) sold well, the Chevy (a downsized Nova) was a bust. What does that tell us? It tells me the American companies had poisoned the well for small cars.

Gasoline prices are on their way back up. Smaller cars not only get better mileage (overall), they are a lot more fun to drive. It is a more personal experience, less like floating in a boat and more like riding a comfortable jetski. The handling that a small car offers can save your life.

There are several factors mitigating against a small car surge, however. First, the big, bloated SUVs are still on the road and the drivers of same enjoy trying to run, or scare, smaller cars off the road. Second, there are areas of the country, like Wyoming, where a small car just seems out of place: too many high winds, too much snow and too many 18,000 pound semis passing at 80 MPH.

Once people learn that there can be safety and high quality in smaller cars, many will consider them throughout most of the US. How many people need to be able to haul five, six or more people more than a few times a year? Not many. Once people get over the idea that a smaller car is a symbol of lack of money, and realize that it can meet all of their needs and, to some extent, do it better than a bigger car, the door will open. A smaller car with a diesel engine could outdo a hybrid on mileage, with lower purchase price, lower maintenance and without the complications of two power sources. Most all electric cars will continue to be priced out of range for many people for at least the next decade, making smaller cars a great option.

Will the buying public change its collective mind about using a car as a measure of prestige? Maybe. Just look at how fast consumers adjusted to 4+ dollar a gallon gasoline. Americans, almost overnight, adjusted their driving habits to take billions of miles per month off the national driving statistics. A car maker that is not ready for the next shock would be foolish indeed.

David

November 13, 2009 2:42 PM

While I might not represent the typical Mini owner, my wife and I would trade our Mini in on a Mercedes B-Class in a heartbeat, especially if it came with a turbo diesel engine. We like small cars for convenience and because we want to consume less oil for environmental and U.S. security reasons. If thinking about the consequences of our actions makes us 'do-gooders' then I suppose we'll have to live with that.

owlafaye

November 13, 2009 8:53 PM

There are many useless autos out there. Smart for Two, Volt, any luxury "hybrid"...endless.

Mercedes is fully capable of getting something out there with incredible mpg in a 4 door hatchback with a diesel or gas primary motive power. They can then intergrate battery electric assist as the technology develops...and they could do this for less than $25,000

0-60 would be so-so, but, so what? A sleek Mercedes econo at a reasonable price would attract a lot of people looking to "green upscale".

Canadien

November 13, 2009 9:55 PM

David (Welch),

Sorry, I think Audi A3 doesn't sell well because there's a more worthy competitor selling for a few thousand dollar less (VW GTI); BMW 1-series also sells in small volume because 1)it wants to recoup its investment in the coupe body style (designed for N. American mainly) ASAP, 2)BMW markets it as a premium sport model with high horse power 6-cylinders, 3)in order to maintain BMW's supposed 'premium' image, the range of 1-series starts at a hefty 30 grand.

Mercedes may partially avoid the adverse currency situation, by following the Japanese car makers, to build locally.

Sven

November 14, 2009 5:28 AM

Hey folks,

in no way does the A or B-class Mercedes compare to any of the models mentioned. They all have what the Mercedes lacks: they represent young, dynamic drivers who can afford to buy a small premium car. The typical A and B-class drivers -in terms of perceived average - are seniors. Of course there are also some younger drivers whose parents drive a bigger Mercedes model and who want "to stick with the brand." The same is true for the C-class. The average age of drivers still ranges somewhere around 50. That is in the home market of Germany. For long, there have been discussion whether to finally stop these two models: they are simply not profitable enough. And here's another one: guess which vehicle is currently the most hated rental car in all of Germany: yes, the B-class.
So dear friends down in Stuttgart, you are in need of action now. Define your brand! Either find a new profitable positioning for these two models or combine them into one car. As of today, both are too expensive and do not offer what a Mercedes represents. And do not compare the current A class with a 1 series BMW or an Audi A3. Event rental company rank these two higher than the A-class.

John

November 15, 2009 4:31 PM

Mercedes little car is cuter than a Yaris and if the quality stays in there with other Mercedes, I think it will sell. However, the price has to be reasonable even for those who don't have to worry about gas prices. Gas will climb so looks like everyone wants a piece of the American Pie, so having a car ready is probably a smart move.

RP

November 16, 2009 12:58 AM

Facts are, Mercedes/Daimler does not know how to design or build smaller cars well. When you compare the MB offering to current VW/FIAT/Honda/Hyundai/Mazda offerings to MB or BMW's One series, their cars are lacking in so many ways. What MB & BMW does have to offer is status and brand affiliation, not a better small, efficient car. Many years ago, there was a "Gentleman's Agreement" between VW and MB, where VW will not build big luxury cars and MB will not build small, high value, high efficiency cars..all that has changed these days..

The BMW 1 series is not selling well, MB's Smart car is not selling all that well, Even MB's A series does not sell or compare well to a VW Golf and the sales numbers prove this.

The quality small hatch back is the most competitive segment of the world car market except in the US where SUV's hold a facade of safety due to size, but in reality, they are roll over death traps that are not required to meet passenger car requirements. Producing SUV's are highly profitable when compared to high quality, high volume small hatch backs like the VW Golf. It is also difficult for some American drivers to give up the size intimidation factor they hold over smaller vehicles. Many would tolerate SUV death traps for how they can treat other vehicles on American roads..

Sprocketboy

November 16, 2009 11:55 AM

I think perhaps the reason that the A3 (basically a rebodied Golf) and the 1 Series are not selling all that well is similar to the Malibu/Cobalt argument: for a little more money, you can get an A4 or 3 Series and a lot more utility. On the other hand, the new Ford Fiesta should not have any real competitors in the Ford line-up and looks like a real break with the small-cars-are-cheap-and-nasty past.

Todd Hebert

November 18, 2009 12:03 PM

I think it is a nice looking car. But have to admit it kind of looks like a Ford Focus on Steroids..LOL

Reise Abenteuer

November 23, 2009 6:50 AM

Never....Years bevor they made great cars,

a

December 7, 2009 4:30 PM

Everyone has to stop being selfish, eat less and drive smaller cars for this great nation to stay great in the future.

Richard

December 27, 2009 4:25 PM

In Canada we already have the B class. When my E350 was in for a checkup, I had the B200 as a loner car. I found it cheap, slow, and ugly. The quality was definitely not up to Mercedes standards. I think it would be a mistake to sell it in the US. it gives the rest of the lineup a bad name.

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Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

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