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Mercedes Counting on Coupe with More Power to Catch BMW

*from www.bloomberg.com, April 10, 2013 (To view original article click here.)

Take Away #1: Mercedes-Benz next week will start deliveries of the CLA, a four-door compact coupe that harkens back to the 190 – a sedan introduced in 1982.

Key Facts and Figures:

  • The 190 sedan earned the nickname Baby Benz because it marked a shift away form catering to the wealthiest buyers.
  • The new model, with more horsepower is at a lower price in the U.S. than competing models from Bayerische Motoren Werke AG (BMW).
  • The CLA is designed to broaden the brand’s appeal, especially outside the slumping European market.
  • The CLA and a planned small sport-utility vehicle use the same underpinnings as the A- and B-Class hatchbacks.
  • The A- and B-Class hatchbacks have thus failed to help Mercedes close the sales and profit gap to BMW and Volkswagen AG’s Audi.

Take Away #2: “We want to beat the competition – on a permanent basis,” said Daimler AG CEO Dieter Zetsche.

Key Facts and Figures:

  • Daimler plans to update its 2013 forecasts later this month after many car and truck markets started the year weaker than expected and Europe showed no signs of recovery.
  • The automaker didn’t reiterate an earlier target to match 2012’s operating profit this year.

Take Away #3: Zetsche is under pressure from investors to show progress in his effort to regain the lead in luxury cars.

Key Facts and Figures:

  • Mercedes has fallen further behind BMW ad Audi since the CEO vowed in 2011 to overtake his rivals by the end of the decade.
  • Mercedes lost the No. 1 position in luxury car sales to BMW in 2005 and sank to third behind Audi in 2011.
  • The company also posted the weakest profitability of the three last year, with car earnings at 7.1% of sales compared to BMW’s 10.9% margin and Audi’s 11%.
  • The gap to the competition widened this year as the A-Class, which was rolled out in 2012 under the motto that “A stands for attack” failed to offset declines in China.
  • Zetsche merged two sales organizations in the country and appointed Hubertus Troska to Daimler’s management board to boost growth in the world’s largest car market.

Take Away #4: Mercedes sales gain trails BMW and Audi in the first quarter and share value declines.

Key Facts and Figures:

  • Mercedes global sales gained 3.5% to 324,898 vehicles in the first quarter.
  • Audi’s deliveries climbed to 6.8% and BMW’s climbed 7%.
  • The struggle to keep pace is reflected in Daimler’s share performance.
  • The struggle to keep pace is reflected in Daimler’s share performance.
  • The market value of Daimler, based in Stuttgart, Germany, has dropped 33% to 45 billion euros ($59 billion) since 2007, compared with BMW’s 54% surge and VW’s 23% gain.
  • Still the catch-up gained some traction in March when Mercedes grew by 6.5% versus 3% for Audi and 4.4% for BMW.
  • Daimler said today that earnings should pick up in the second half helped by the CLA and an updated E-Class.
  • The stock climbed 1.79 euros, or 4.4%, to $42.66 euros today in Frankfurt trading.

Take Away #5: Mercedes is moving towards sportiness and a youthful modern design.

Key Facts and Figures:

  • The small-car push is reminiscent of the Baby Benz in the 1980’s.
  • The C-Class, the successor to the 190, is now the brand’s best selling line worldwide.
  • To create buzz when the CLA hits German showrooms next week, Mercedes’s dealership in Leipzig will host an art exhibition.
  • While the Berlin store will install a go-cart track and stage a concert with German hip-hop singer Chima.
  • In the U.S., where the car will go on sale in September, Mercedes ran a Super Bowl ad featuring swimsuit model Kate Upton.

Take Away #6: Mercedes is undercutting BMW and Audi with the CLA in the U.S., where the Daimler unit is leading in luxury car sales this year.

Key Facts and Figures:

  • The car will start at $29,900 for a 211-horsepower model.
  • That compares with $32,550 for a 180-horsepower BMW 3-series and $32,500 for Audi’s 211 horsepower A4.
  • Audi will counter Mercedes with a $25,000-euro sedan version of its A3 compact, which will debut at the Shanghai Auto Show next week.
  • The new Audi will be equipped with a 140-horsepower gasoline engine that can accelerate the car to 100 kilometers (62 miles) per hour in 8.4 seconds.

Take Away #7: Boosted by growth in compacts as well as an updated E-Class and a new generation of its S-Class flagship, Mercedes sales could rise this year.

Key Facts and Figures:

  • Mercedes sale could rise this year by 7% to 1.45 million vehicles this year, researcher IHS Automotive estimates.
  • The gain of 92,700 deliveries would outpace BMW’s 56,500-car increase as Audi’s sales slightly sink.
  • The CLA will add almost 36,000 vehicles to sales, IHS predicts.
  • The automaker is bringing a total of 13 new models to market with no predecessor to market in the next eight years, Zetsche said.
  • AMG, Mercedes’s high performance unit, will offer a version of the CLA boasting a 360 horsepower turbocharged engine that speeds to 100 kph in as little as 4.6 seconds.
  • Yet Mercedes hasn’t abandoned its traditional emphasis on safety, offering options like a radar based collision prevention system.

Key Facts and Figures:

Take Away #8: The new models offer Mercedes the opportunity to peel away customers from BMW and Audi and to regain lost ground.

Key Facts and Figures:

  • “But Daimler is still acting lethargically compared to the dynamism at Audi and BMW,” says Thilo Mueller of MB Fund Advisory GmbH.

*To view original article from www.bloomberg.com click here.

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