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Customer LoginsMercedes-Benz CLA has a strong start
Monthly summaries of US car and light truck sales focus on macro results such as the seasonally adjusted annual rate (SAAR), corporate results and brand results. Micro outcomes get less publicity even though they may be as noteworthy, if not more so. For instance, there has been little mention given to the fact that Mercedes-Benz dealers delivered 4,895 CLAs in October, its second month on the market. This tally follows 2,310 sales in September. The October figure is surprisingly strong and has several implications for the make and the segment.
With the CLA, Mercedes-Benz is the first premium brand to market a sedan positioned under its traditional compact premium sedan (based on price), thereby giving Mercedes-Benz a near-term volume advantage in the premium market. Audi will respond with the A3 sedan in 2014, but BMW will not bring the 1-Series sedan to the US until 2016 or 2017. Neither Lexus nor any of the other premium players has a sub-compact sedan close to launch in the US.
CLA cannibalization of the C Class was modest in October at 14% and the combined October CLA/C-Class total was up 50% at 11,443 versus the 2012 C-Class-only total of 7,635. To minimize cannibalization, Mercedes-Benz will need to pull the two products as far apart as possible in the minds of the consumer. This will become easier late next year when a redesigned and larger C-Class comes to the US. In the meantime, we should continue to see emphasis on price and value for the CLA but size, performance, and luxury for the C-Class.
Will the CLA tarnish Mercedes-Benz's image? There are advocates of both sides of this debate. Some observers believe that marketing such a product, with a starting price below $30,000 and quasi-luxury interior materials, will compromise the tri-star's image in the long term. Others say this will not occur, partially because it has not occurred thus far with increasing volumes of low-end products such as the C-Class and GLK.
Mercedes-Benz and its competitors still market high-end products such as the S-Class, 7-Series and LS, and most of their parent companies offer low-volume, exclusive makes such as Rolls-Royce and Bentley (though Daimler no longer has such a make after dropping Maybach). So, an upscale customer wanting an exclusive product could move to one of these models or makes.
Measuring the impact of new products on a make's image is a challenge. It is clear that in the next six months, the CLA will give Mercedes-Benz an advantage, based on volume, over its core luxury rivals: BMW and Lexus. Whether the CLA will or will not hurt the make's reputation over the long term is a question for which there seems to me to be no clear answer.
Tom Libby is manager, loyalty practice and industry
analysis, IHS Automotive
Posted 20 November 2013