To focus on wealthy buyers, Mercedes A-Class Sedan to be discontinued after this generation, B-Class too
Hans · Feb 12, 2022 10:21 AM
Current generation Mercedes-Benz A-Class Sedan to be the first and the last, sales to continue until circa 2025 / 2026
B-Class to be dropped too
Mercedes-Benz is reorganizing its product portfolio, less emphasis on sales volume, more on profit
Mercedes-Benz will be cutting its compact cars range - once credited for rejuvenating the brand by appealing to younger buyers - to focus on larger, higher profit margin models, reports German business publication Automobilwoche.
The current generation A-Class Sedan (V177) will be the last, according to sources in Germany familiar with the matter, while the B-Class (W247) will also be culled.
The GLA however, being an SUV, which typically offers better profit margin than compact hatchbacks and sedans, is likely to stay.
Separately, Automotive News USA also reported that the A-Class Sedan (hatchback is not sold in the US) will be discontinued after 2022, while the CLA will remain on sale for a little longer until 2023, citing memo to dealers.
For the rest of the world, the A-Class Sedan (B-Class and CLA too) will remain on sale until the end of its planned model lifecycle, circa 2025 - 2026.
The A-Class range is due for a facelift by 2023.
You can be certain that the new 2023 Mercedes-Benz A-Class Sedan will remain on sale in Malaysia, also as a locally-assembled (CKD) model.
Local assembly for the A-Class Sedan started in late-2021 and obviously Mercedes-Benz Malaysia will want these investments to pay itself off in the model’s remaining years.
The discontinuation of lower priced compact models is not a surprise, as CEO Ola Källenius has already said in his Strategy Update in October 2020, “We will adjust the portfolio towards the highest pockets of profitability,” adding that Mercedes was “not going to chase volume” in lower-margin compact segments and that “we are prepared to eliminate models that we don’t think meet the profitability targets.”
Under the new Mercedes-Benz Group AG (the previous Daimler AG company is no more), products with such low margin contribution don’t have a future, even if they contribute decent sales volume. The new Mercedes-Benz prioritizes profits over sales volume.
CFO Wilhelm have also previously singled out compact cars to be the company’s weakest performers.
In the same Strategy Update 2020, he said "We had fantastic growth, we had strong growth at Mercedes in the last decade, with great achievements great successes but maybe we went a bit too far to cover each and every space, in each and every segment, in particular when compact cars come to mind. We want to be in each and every market, for the benefit of volume. We want to be the No.1 in each and every market. We will now drive the market by contribution margin rather than unit sales. But let's be clear, volume matters in this industry. We are not giving up on volume, but we will drive it by absolute contribution margin and by the quality of the contribution margin or contribution margin ratio."
We will miss the current Mercedes-Benz A-Class Sedan, which will go down in history as the first and the last of its kind. It ticks all the right boxes for anyone looking for a premium sedan but don’t want a traditional-looking C-Class.
The A-Class Sedan, especially the A250 AMG Line (from RM 239,857), rides and drives well, looks properly expensive inside and outside, with a hint of athletic tautness to its proportions, and it looks good in every angle – everything the three-cylinder BMW 218i Gran Coupe (from RM 221,817) isn’t.