- Mercedes is reportedly ditching luxury branding to pursue higher-volume, affordable models.
- The company aims to produce more than 2 million vehicles annually to restore profitability.
- Executives blame excessive Maybach and AMG spending for the current financial downturn.
For decades, Mercedes-Benz has stood as a symbol of automotive prestige, crafting some of the most admired vehicles on the road. But the market is evolving, and Mercedes is not immune to the pressure.
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Like many long-established automakers grappling with economic headwinds and shifting consumer expectations, the brand is now entering a period of uncertainty, one that may involve stepping back from the luxury identity it once leaned on so heavily.
Read: Mercedes To Roll Out 19 New ICE And 17 EV Models That Will Ditch The Egg Shape By 2027
According to unnamed insiders, Mercedes-Benz is beginning to move away from its long-held luxury positioning. The word “luxury” is reportedly being phased out of the company’s official strategy, with its target image shifting toward a broader, more inclusive appeal.
The “L-Word”
Some within the company have even started referring to luxury as the “L-word,” according to Handelsblatt, a telling reflection of how dramatically the internal narrative may be changing.
Speaking to the German publication, Mercedes CEO Ola Källenius emphasized that “our goal was and remains to offer customers the most desirable products in all our segments.” While Källenius has long favored profitability over production volume, slower factory output appears to be changing the calculus.
Sources inside the company say there’s now a push to bring pricing and sales back into alignment. This may include increasing production volumes, especially as employee representatives like works council chairman Ergun Lümali argue that producing fewer than two million vehicles per year is simply not viable.
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The report goes on to state that the company has spent too much money and time on high-end Maybach and AMG models with a price tag of well over €100,000 ($116,000). While these vehicles may showcase engineering and design prowess, they haven’t been enough to keep margins healthy across the board.
Profits Crumble
Profits at Mercedes slumped by more than half through the first half of this year, and its automotive arm now has a margin of just 5.3 percent, far below previous highs of closer to 15 percent. According to Kallenius, “our industry is experiencing heavy rain, hail, storms, and snow at the same time.”
To battle the tough times, Mercedes is planning a massive product offensive and moving forward, “intends to be more modest and communicate more realistic goals.” This includes its pursuit of selling affordable compact cars and SUVs to the masses.
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Earlier this year, Mercedes announced that it was reducing its commitment to EVs, and in addition to launching 17 new EVs by 2027, it also plans to release 19 new or heavily revised combustion-powered vehicles over the coming years. In its pursuit of profits, it seems Mercedes has decided volume is more important than ever.