Under new management, the Three-Pointed Star plans to return to its solidly-built, classically-designed, technologically-superior glory days – and cut costs in the process. By Georg Kacher.
MAKING MERCEDES GREAT AGAIN
Being ‘too big to fail’ is a myth of the modern corporate world. No one is safe from drastic changes to public sentiment, buying habits and supply issues. The Stuttgart behemoth that is Mercedes-Benz is looking wobbly at present, as years of unnecessary spending and a lack of clear-cut preparedness for the EV future are starting to hit home.
But 2020 is the year one of the biggest names in the premium car market pulls up its socks and gets real, with a vision to return itself to the glory years of the ’70s and ’80s – decades in which it built cars that lasted for generations and stood clear of the pack when it came to luxury and innovation.
The updated E-Class is an auspicious start; the mid-size exec looks cleaner and simpler for 2020, and it’s the same story under the skin. The engine range has been slimmed and made cleaner, while tweaked safety kit and a new steering wheel with touch panels for buttons suggest Merc is going for gold in terms of technology. Its flagship, the S-Class, is due a new model in 2021. As for EVs, Mercedes was late to the party with the lukewarm EQC but is finally amping up its electrification. The EQA – a GLA-based EV – will arrive this year, while the epic EQS concept previews what will become a glamorous all-electric flagship. These new arrivals should reaffirm Merc’s position as a leader in luxury and technology.
While that’s a decent start on the right path, recently-appointed new boss Ola Källenius has much more to face. The Swede, who ran R&D before climbing into the hot seat, has issued three profit warnings as they effectively halved in 2019, forcing Merc’s bean counters to keep billions in reserve. Those reserves will undoubtedly be called upon to make penalty payments for cheating on the emission front, not to mention paying the heavy fines likely to come for missing the more severe CO2 targets in 2021. If this scenario gets worse over time, where will Mercedes stand come 2025? ‘With our back against the wall,’ replies the CEO without the trace of a smile. ‘But we would be in good company, because our competitors face similar imponderables and setbacks. These days success is no longer exclusively of your own making.’
That may be the case, but Mercedes is going to make as much of its own success as it can. To regain lost momentum, the board has decided to pull out all the stops, engaging three new pillars to get Mercedes comfortably in the black: Electric First; AMG – The New Porsche; and MBD, embracing the digital revolution. ‘Electric First is an essential step towards modern sustainable luxury,’ says Källenius; the plan is to introduce an all-electric ‘EQX’ variant alongside more conventionally-powered options.
A new push on AMG, with Källenius’ best buddy Tobias Moers at the helm is already in progress. ‘AMG has a big potential to grow,’ believes Källenius. ‘Mid-term, around 200,000 units should be a realistic target.’ (AMG sold 132,136 cars in 2019.) MBD, meanwhile, must drive the transition from car manufacturer to major tech player in order to remain relevant. Along with these plans, Stuttgart is undoing years of unnecessary spending. For example, while BMW has consolidated most of its cars onto one of two platforms, Mercedes committed itself to a costly variety of parallel architectures. That changes now as the budget bubble bursts, with a commendably pragmatic scalable Mercedes Modular Architecture (MMA1/MMA2) due in late 2024 or early 2025.
This MMA fightback starts properly with the next C-Class, exclusively equipped with four-cylinder engines, sources say. That thinking will move on to larger models, which is nothing short of revolutionary for Mercedes; just try to picture a GLE or an S-Class plug-in hybrid with a humble transverse four-banger under the hood. But Merc is serious, having signed off a new four-cylinder engine with 1.5- and 2.0-litre capacities and power outputs ranging from 200 to 275 horsepower. With these engines Mercedes may phase out some of its sixes, or use the powerplant as the basis for an expanded plug-in hybrid range.
As for electrification, the biggest battery pack currently being evaluated is rated at 120kWh, but if Tesla can do 200kWh in ‘Plaid’ guise, Mercedes may well find similar ways and means. The marque’s portfolio is still in a state of flux. While the short-term secret to success is the skilful co-ordination of all its platforms, Mercedes is going to have to be smart in the short term if it’s to generate profit. Confirmed detox casualties are the two-door E- and S-Class spin-offs. The AMG GT 4-Door and CLS are both under-performing and, to add insult to injury, cannibalising each other, so both may be axed. The next SL regains the traditional soft-top (as detailed in April’s issue), while the next-generation AMG GT will share the new SL’s platform. It’ll be more agile, usefully narrower and even sportier.
And, even though SUVs are pure poison for the CO2 balance sheet, they are what people want – end of discussion. Problem is, evolution within the conventional crossover framework seems to be frustratingly limited: add a coupe, add an AMG version, add an EQ derivative… That’s about it.
But Mercedes is still a pioneer, and has instructed its design teams to think outside the box. Four interesting new products are on the drawing board and known internally by their acronyms: CUT, GUT and LUT. In this niche-finding process, the Compact Utility Tourer replaces the B-Class, the Grand Utility Tourer reinvents the oddball R-Class and the Luxury Utility Tourer may serve as a five-star, outback version of the S-Class. If extended personal space does indeed epitomise future luxury, this might be the final piece in the puzzle Ola Källenius must solve. The prize? Nothing less than a return to the glory years with which, for many, Mercedes is still synonymous.
Mercedes-Benz is still a pioneer, and has instructed its design teams to think outside the box. Merc’s hoping the electric EQS (below) can be a second-gen S-Class for the 21st century. Former R&D man Ola Källenius must now steer Merc to a new golden age.