After overtaking BMW last year as the world’s largest luxury automaker, Mercedes-Benz is turning its attention to a newer, untapped audience: millennials seeking smaller cars as they progress through the stages of early adulthood.
The German brand is revitalizing its small car lineup with plans to expand its global family of five compact models to eight. Mercedes revealed the Concept A Sedan, which it describes as a potentially new and sleeker body style for its compact vehicles, at the Shanghai Auto Show last week. Its corresponding advertising campaign, called “Grow Up – Spend Money Wisely,” kicked off last month with eight films that depict down-on-their-luck millennials stumbling through the dark side of exiting adolescence.
Mercedes said the campaign is the most “extensive content creation in the history of the brand.” Directed by Gustav Johansson, the three-to-five-minute films feature characters “caught between the coolness of adolescence and the square-ness of adulthood who embody the attitude to life of the new compacts,” such as rapper A$AP Rocky with the brand’s CLA coupe.
The German automaker hopes that the “My First Mercedes” theme will appeal to a new cohort of customers, helping the brand retain its position as the biggest luxury automaker in the world. Mercedes has sold more than two million compact cars worldwide since the current-generation A-Class launched in 2012. Three models – the B-Class electric vehicle, CLA four-door coupe, and GLA compact sport utility vehicle – are sold in the U.S. The A-Class hatchback is available in western Europe, China, Japan, Australia, and South Africa, and the CLA Shooting Brake wagon is sold in western Europe and Japan.
The expanded lineup will help foster brand loyalty by capturing customers when they’re young, Steffen Jastrow, head of development for Mercedes AMG-Compact Cars, said during a test drive of the five compact cars this month in Budapest, Hungary, where the B-Class, CLA, and CLA Shooting Brake are manufactured. (Mercedes also makes the B-Class and GLA at its lead compact car plant in Rastatt, Germany. Mercedes says that 70% of A-Class drivers in Western Europe are new to the brand and that they are young: the average age of drivers of the current A-Class generation is the 13 years younger than the prior model series. Younger buyers are also springing for more expensive versions of compact cars. The “most represented age group” for compact car buyers who opt for the high-performance AMG sub-brand is 35 to 45.
Mercedes has traditionally been known for its sleek sports cars and large and luxurious rear-wheel drive sedans, but small and compact cars can expand opportunities exponentially for the German automaker, said Jessica Caldwell, executive director of industry analysis at Edmunds. “It's a smart move considering there are only so many customers globally that can afford an S-Class or G-Class.”
Of course, Mercedes’ compact cars cost more than the typical young adult spends on an entry-level car in the U.S. The all-electric B250e and CLA coupe start at $39,900 and $32,400, respectively. Redesigned for 2018, the GLA compact SUV starts at $33,400 and tops out at more than $50,000 for the AMG version.
Mercedes hasn’t announced details about the seventh and eighth models to join the global compact lineup.