Mercedes' AMG High-Performance Badge Gets An Entry-Level Line

Fifty years ago, two former Mercedes-Benz engineers opened a tuner shop to outfit the German automaker’s cars with bigger engines. They called it AMG, an abbreviation of the initials of their first names – Aufrecht and Melcher – and Aufrecht’s hometown of Grossaspach, Germany.

“It was the little tuning company that no one had ever heard of,” said Bernie Glaser, general manager of product management for Mercedes-Benz USA. Since then, the AMG badge has become synonymous with sporty dynamics and racecar power. Mercedes purchased the company in 2005, bringing its high-performance division in-house.

Now Mercedes-Benz is marking the AMG sub-brand’s golden anniversary with the launch of a more affordable and slightly less powerful line of performance sports cars. The new 43 portfolio, designed as the gateway to the AMG brand, slots between the comfort-oriented Mercedes brand and the high-priced, high-performance AMG models.

 

The 43 models are equipped with a 3.0-liter V6 twin-turbo engine that delivers 362 horsepower power, which Mercedes hopes will serve as a happy medium. Most Mercedes-Benz base models get a relatively tame 2.0-liter four-cylinder engine that delivers 241 horsepower. Meanwhile, the top-of-the-line AMG 65 family packs a handcrafted, 621-horsepower 6.0-liter V12, leaving the middle market wide open.

The brand found that car enthusiasts wanted more dynamics “but not everyone is willing to step up” to a V12 engine, said Tobias Moers, chairman of the board of management for Mercedes-AMG. Prices for AMG models routinely run into the six-figure range.

AMG launched its first 43 models in July amid a record year for the sub-brand, with sales in the U.S. – its largest market – up 33% to 23,261 vehicles. So far, nine Mercedes models – a mix of sedans, coupes, and SUVS, and one roadster – have gotten the 43 treatment. The breadth has attracted customers who would have shopped the high-performance lines from Mercedes’ German competitors, the Audi RS and BMW M, Glaser said.

The automaker’s growth strategy takes a page from the playbook of many fashion retailers that expand their breadth with sub-brands, such as Gap, which targets other markets with its Old Navy and Banana Republic brands, said Rebecca Lindland, executive analyst at Kelley Blue Book.

The 43 line “will broaden the appeal and accessibility of the AMG line by making it more affordable to shoppers,” Lindland said. “There may be some cannibalization from the pricier AMG models and from the Mercedes brand, but there will be enough new buyers to compensate for any overlap.”

Internally, Mercedes is focused on tempering its expansion plans with its need to maintain the three-pointed star’s exclusivity. The brand’s challenge now is to decide which features to give the 43 without alienating its upmarket customers. “We truly walk the line every day,” said Krista Helmbrecht, assistant product manager for AMG. “It is really a daily discussion.”