Found this really interesting article. So what do you think? Do U.S. automakers have to worry about the introduction of the CLA.
Does This New Mercedes Model Scare U.S. Automakers? | Wall St. Cheat SheetAt the Geneva Motor Show this month, Mercedes-Benz is scheduled to formally introduce its newest member of the family, dubbed the CLA. Companies introduce new models all the time, but the CLA has a significant amount riding on its success.
The CLA is being introduced as an addition to Mercedes’s existing A-Class, a compact model currently available in Europe, but one that will be making its way to the U.S. later this year. It will provide another entry-level option to prospective buyers, a market segment that has caused a dramatic lag for Mercedes behind key rivals such as BMW (BMW.DE) and Volkswagen (VLKAY.PK).
The CLA is intended to jolt the brand back to life, following a stock flat line over the past seven years under the leadership of Dieter Zetsche. During this time, Mercedes’s stock has grown only 6 percent, compared to BMW’s 87 percent growth and VW’s five-fold gains. With MB already positioning other executives to replace Zetsche, the CLA looks like his last opportunity to bring the company back
Significant under-performance in the compact- and small-car market, combined with missed opportunities in new markets — specifically China — have resulted in Mercedes’s stock flatline. The MB subsidiary Smart has been posting large losses, as VW’s Audi and BMW have managed to ensnare the small car market in Europe.
However, the European markets haven’t just been weak for Mercedes. American manufacturers General Motors (NYSE:GM) and Ford (NYSE:F) have also been seeing large difficulties in the region, and have subsequently rolled back their respective presences in the area. The new CLA and impending A-Class though, could pose a new threat to domestic manufacturers on American soil upon their arrival…
GM’s Cadillac brand has recently launched the ATS, which offers Cadillac styling on a more compact package. The car was met with great acclaim from critics and publications, who noted its ability to compete with European competitors as laudable considering Cadillac’s image as a maker of large, floaty, underwhelming models.
Ford, too, has recently made large investments in its luxury brand, Lincoln. Like Cadillac, Lincoln must shake off its image as the boring, muted company so it can compete better against European luxury imports. In the past, Cadillac and Lincoln models have been nothing more than Chevrolet or Ford models in a tuxedo. Realizing this, the companies have gone back to the drawing board. But will it be enough?
The CLA will pose a refreshed competitor to the American luxury companies, who have never really produced a small, compact car with the same trappings as larger models…
With Europe written off by American companies — at least until the economic climate there improves — it’s a race for Asia, particularly China, as companies attempt to pick up lost market share in the largest developing market. China is the world’s most important growth market, whose luxury car sales are set to overtake the United States and reach 2.7 million vehicles by 2020.
GM has already invested heavily in its Asian facilities, but only time will be able to tell us if Mercedes’ new weapon will catch on among Chinese consumers. Given the company’s limited dealership network in China (one of Zetsche’s largest missed opportunities), MB will have to work extraordinarily hard to move a competitive number of vehicles in the region.
In 2012, GM sold 30,010 Cadillacs in China, but aims to sell 100,000 or more by 2015, reports indicate. Ford plans to bring the Lincoln nameplate to China next year. Daimler’s website reported that Mercedes moved 196,211 units in China last year.
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