Mercedes-Benz moves into small car market
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The entry into a new market for Mercedes-Benz will likely not go without a hitch. Following the other German auto makers big moves into the premium subcompact vehicle market the company will likely see them have a need to keep costs down as it is currently struggling to keep pace in several other categories. But this is a market that the auto maker cannot afford to stay out of, because of the vast amount of potential buyers, and if it wants to make a profit then the company will need to bring volumes up so they can profit off of the future tiny Mercedes.
This will be the first time that Mercedes-Benz will be creating very small cars, a class usually reserved for mass market vehicles. Typically, the auto maker has been focusing on higher end, high profit vehicles made for the upper class, but this category has shrunk in recent years, hence the need for diversification. The smallest Mercedes right now is a Class-A, which does not even come close to being a small family vehicle. The company will need to work hard in order to bring everything that makes their cars so wanted into this new category.
According to a spokesperson from carbreakdowncover.com, the company is committed in keeping the same style and quality that they are known for even with a mass market vehicle. The new cars are set to launch in 2016, but there is a long road ahead for the company still. The creation of an entirely new class of vehicles requires a new factory to be created, including equipment that can work on the smaller models. This will cost quite a bit of money, which is why the company has to mass produce these vehicles as soon as possible.
The small family car market used to be fairly rare from German auto makers, before Audi started in 2010 to provide some vehicles that reached into this market. This is fairly interesting since German customers do sometimes buy these cars, but will often go for Japanese or Chinese models. With this new class of vehicles, the company aims to reach these customers and make them into loyal Mercedes buyers.
The profit margin on these types of car is smaller, and as such it is a new world for the company used to large profit vehicles. It is a completely different revenue model, where the company will need to create a lot of cars to reach the same profit figures, but thankfully the market is there to fulfill it. Now all they have to do is produce cars that buyers will want to acquire. It used to be that subcompacts would destroy the high end, premium image, but times are changing.
The size of cars is also changing, with small cars of today being what used to be subcompacts. In the 70s and 80s cars used to be up to 25% bigger on average, so auto markers had to adjust as demand has changed. With several companies like Nissan and Renault making a lot of money in this category, Mercedes-Benz hopes that its new foray into the market will bring in the needed funds as well.
