Mercedes is pivoting even harder toward 'top-end' cars

·Senior Reporter
·3 min read

German automaker Mercedes-Benz (MBG.DE), synonymous with luxury and premium cars, is now planning to lean in even more on the "Top End."

Earlier today in a presentation titled “Mercedes-Benz sets out long-term ambitions as the world’s most valuable luxury car brand,” the automaker’s chairman Ola Källenius laid out Mercedes’ future path.

“What has always been the core of our brand is now also the core of our strategy: the luxury segment. We are further sharpening the focus of our business model and product portfolio in order to maximize the potential of Mercedes-Benz even in challenging conditions,” Källenius said in a statement.

Paris, France - 13 February 2022: A luxury Maybach S650 car in a street of Paris, France
Paris, France - 13 February 2022: A luxury Maybach S650 car in a street of Paris, France

The new path forward can be broken down into four main points:

Investment revamp: Key to that future is revamping the brand’s investment in its new products. Here the focus will be on the top-end models, with an emphasis on making the brand’s entry-level cars, “Entry Luxury.” Mercedes says more than 75% of investments will be dedicated to “Top-End” and “Core Luxury” segments.

Product mix reboot: Part of that focus on the high-end means trimming the products at the entry level. Mercedes says it will “focus on only four model variants with elevated positioning” at the entry level, while redefining what that entry point is. The current entry-level model line up of 7 vehicles will be trimmed by 3 models.

Mercedes expected growth of top-end vehicles
Mercedes expected growth of top-end vehicles

Focus on high-end sales: With that refined focus on the high-end with new investments and trimming of the entry-level product portfolio , Mercedes now sees “Top-End” vehicle sales rising around 60% by 2026. Key to that boost in the high-end is a “product offensive from Maybach, AMG and G-Class with dedicated EV-characteristics and greater individualization,” along with new cars from the “‘MYTHOS Series’ of highly-exclusive collectible cars.”

Boosting margins: With a focus on the higher-end vehicles, there’s generally more room for profit growth per unit as the product mix changes. Mercedes says its focus “as pure-play company in the luxury segment” will boost margins to 14% in “favorable market conditions by mid of the decade.”

The future is still electric

In addition, key to much of the future growth is electrification, where Mercedes plans to go all-electric by 2030 and spend 40 billion euros on its electric vehicle (EV) rollout. Keeping with that theme, Mercedes is revealing an all-new EV concept tonight, dubbed the Vision AMG, which Mercedes says is a peek into the EV future of the Mercedes-AMG performance sub-brand.

Mercedes says the Vision AMG will use an “Axial Flux Motor” developed by Mercedes subsidiary YASA, that supposedly is lighter and delivers more power than conventional electric motors.

With regards to Mercedes’ EV rollout in the near future, in addition to the EQS EV sedan that is already on sale here in the U.S., Mercedes plans to release the EQS electric SUV, EQE electric mid-size sedan, and EQB mid-size SUV later this year.

Shares of Mercedes-Benz Group were trading down around 3% today in Germany.

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Pras Subramanian is a senior autos reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

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