Mercedes
The luxury bet dared by CEO Ola Källenius.
(Photo: imago images/Arnulf Hettrich)
Shorten supply, increase prices, arouse desire: Mercedes-Benz is fully committed to luxury and even deleted the A-Class from its portfolio in the middle of the decade. For some, this comes as a shock. With the end of the best-selling model with the star in Europe, the Dax group is finally moving away from ordinary people, is the criticism of some politicians and industry experts.
This is cheap polemics. Mercedes was never a brand for the masses. Nevertheless, the luxury bet by CEO Ola Källenius is daring. The Swede bases his course on noble fashion logos such as Hermès, Louis Vuitton or Salvatore Ferragamo, which succeed in selling accessories that are sometimes completely overpriced with craftsmanship and clever marketing.
But cars are not handbags. In the long term, luxury prices for technical products such as cars can only be justified with innovations. Otherwise the promise of luxury becomes a sham.
The problem is: producing technically excellent vehicles and constantly enriching them with digital upgrades is much more difficult than producing fashion items.
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Incremental improvements alone will not be enough to assert oneself. The Nokia crash and Apple’s rise to become the most valuable tech group teach us that. Mercedes is currently managing to keep the competition at a distance with innovations such as the “Drive Pilot”, the first highly automated driving system in the world that is street legal. However, the big test of how sustainable traditional car manufacturers are is still to come.
From 2024, Mercedes wants to use its specially developed MB.OS operating system in the first series. The Stuttgarters cannot afford serious problems here. The engineers and programmers from Swabia have to show that they can master the increasingly complex electronics in modern cars just as well as they do the chassis.
In the end, the symbiosis of hardware and software behind MB.OS should be superior to all other systems on the market – and permanently. But there are doubts here. Software is considered a game of scales. The more data that is generated, the faster the algorithms learn. In theory, large suppliers such as Volkswagen or Toyota with sales of around ten million vehicles per year have an advantage here.
Tesla is also striving for size and wants to sell up to 20 million electric cars in eight years – and update them with constantly new software. It will be tough for Mercedes to assert itself against these ambitions with “digital luxury”.
More: Mercedes deletes the A-Class – a turning point that triggers criticism