2013 Geneva: Zetsche’s Benz Baby

CEO Talks Small, Premium Cars

GENEVA – Mercedes-Benz previewed its 2014 CLA250 just before the Detroit show, then whisked it off to a fashion show in Berlin. With first drives just concluding, Geneva qualifies as a kind of world premiere for its front-drive “baby CLS.” Our review goes off-embargo Wednesday afternoon.

The show also gives Mercedes’ top executives time and opportunity to explain themselves. While Europeans are acquainted with Benzes that don’t have MB-Tex synthetic “leather” or real leather seats, there’s some cost-cutting that will be obvious to American S-, E- and even C-Class buyers. Base price in the U.S. when the CLA250 goes on sale this fall is $30,825 with destination. Add a premium package that should push the price to the $33,000-$34,000 range and you’ll get heated front seats, Harmon-Kardon stereo, Sirius XM radio and an iPod connector.

The car premieres this fall in the U.S. with a 208-horsepower, 258 pound-foot 2.0-liter gas direct-injection turbo four and seven-speed dual-clutch transmission. A 355-horsepower, 2.0-liter twin-scroll turbo CLA45 AMG comes in November, and 4Matic all-wheel-drive is added as an option to the CLA250 by Spring ’14.

In his unveiling of the CLA-Class Tuesday morning, Daimler CEO Dieter Zetsche called it a “premium car.” Does Zetsche perceive a difference between “premium” and “luxury”?

“In the majority of the markets, Mercedes continues to be perceived as the number one luxury brand,” he said in a roundtable interview Tuesday. “Not by the numbers, but by the brand equity. This is a brand connected with S-Classes and E-Classes.”

“It will be difficult to scientifically separate the difference between premium and luxury,” he says. “To some extent I would say, it depends on the markets. In German markets, most likely our brand is not luxury … with 10 percent market share, sometime you’re the top brand of all brands. In the U.S. market, where we are more like 2 percent market share, we are luxury. That’s not black-and-white.”

The C-Class expanded the scope of the brand, he says, and Mercedes needs a car that can reach younger – and young-spirited – customers. Zetsche is not one to turn down baby boomers with empty, or no nests, who will embrace a more fashionable, sporty-looking Mercedes sedan with the tight back seat associated with a coupe body.

“When you talk about the age of buyers in some markets of certain brands,” he says. “Probably the main correlation is price. When our cars are sold as pre-owned cars, sometimes our buyers are 10 years younger.“

Will Mercedes make money on the CLA in the U.S.?

“We are not a welfare organization, but we are listed on the stock market, and our purpose is to make money. And that includes the CLA. The prerequisites to get there … better mix of labor costs, including a new plant in Hungary,” Zetsche says. Add in a single architecture for its five-model small car family (CLA, B-Class, B-Class electric, A-Class and the coming GLA crossover), results in more than 70-percent commonality. “It includes the development of entry-level engines, which are developed together on the basis of Renault engine.” The family will help Mercedes achieve stricter fuel efficiency standards, too.

Zetsche feels this adds up to an affordable premium small car that will appeal to a majority of younger customers.

“There are some [Gen Y customers] who will look at a car as a means of transportation, to get from A to B without getting wet. But there’s a majority, I would say, which aspires for products that express themselves, and their wishes and attitudes. For this larger part of younger buyers, definitely a premium or luxury brand is better than a commodity brand.”

Of course, a new, additional high-volume premium car will help Mercedes keep up with, and perhaps pass, the competition. We asked whether it is important that Mercedes beat BMW sales in the U.S. market.

“On volume, and based on substance, I think it’s important we strive for this number-one position,” he says. “In the sense of games, short term, and in terms of investing money to make gains in December, I think that at any value, we are not participating in these kinds of games. Last year, we were leading by end of November, but not the end of the year. This year, we’re leading in the first two months.”

Come September, Mercedes will have another weapon in its arsenal, against BMW and Audi, in the U.S. A premium car.

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