Mercedes-Benz focus on high-end segment to increase profit

New Strategies in May 2022

In May 2022, Mercedes-Benz shared its updated strategy and key highlights are in the following.

Profitable growth: Reshaped product portfolio with focus on Top-End Luxury, Core Luxury and Entry Luxury. More than 75% of investments will be dedicated to Top-End and Core Luxury segments.
Top-End Luxury: Share of Top-End vehicle sales projected to rise by around 60% by 2026. Products from Maybach, AMG and G-Class will be dedicated EV-characteristics and greater individualization. Also, there are “MYTHOS Series” of highly-exclusive collectible cars.
Core Luxury: 2023 E-Class aims to set new benchmark in digital customer experience. What’s more, the company is developing additional electric vehicle specifically for Chinese market on EVA2 platform.
Entry Luxury: The German automotive giant focuses on only four model variants with elevated positioning compared to today. On the other hand, new entrance point will be redefined. It means that products will leverage VISION EQXX EV-technology and new MB.OS software
Brand management: The company continues its iconic communication and selected luxury collaborations. For example, they will be rapid expansion of direct sales and dedicated “Brand Experience Centers” for Top-End vehicles
Financial performance: Mercedes-Benz redesigned and repositioned to achieve goal of structurally higher profitability and reduced volatility. More specifically, strategic margin ambition as pure-play company in the luxury segment raised to approximately 14% in favorable market conditions by mid of the decade. Thus, product mix and pricing power are key drivers.

Mercedes-Benz has already shared its electric vehicles and batteries planning in 2021. The German automotive giant decided that all newly launched architectures would be electric-only from 2025 onwards. It also intends that Mercedes-Benz will launch three electric-only architectures in 2025. Furthermore, Mercedes-Benz will be ready to go all electric at the end of the decade, where market conditions allow. To realize this ambitious transition, the company installs battery cell capacity of more than 200 gigawatt hours with partners.

Therefore, we can easily understand that company’s update strategy is accelerating its electric-only approach. Of course, in 2022, there are many uncertainties around us. In fact, gas price is skyrocketing in many countries and the inflation rate is really high. As a result, some people say that electrification in the automotive industry is slowing.

However, the rich people have increased their assets during the pandemic at the same time. Several researches prove that the gap between the rich and the poor is widening after the pandemic. Also, this trend is still continuing. This is because the rich people have more assets to invest and they can diversify it by adjusting the external environment.

High-end EVs

In this sense, high-end class of Electric Vehicles does make sense. This is because the price of Electric Vehicles is still expensive in general. In addition, people all over the world are worrying about our sustainability more than before. As a result, climate change becomes more important issue for us. Also, many people across the globe, especially for younger people, are taking care of this issue.

Therefore, it makes another incentive to the rich people to buy EVs since they want to distract criticism. Thus, we think that Mercedes-Benz’s strategy looks nice and product mix and pricing power are key drivers as they mentioned.

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