Forget the Birkin bag comparisons and the softly-padded just-for-show leather seats – Mercedes is rewriting its story, and for the first time in decades, the word ‘luxury’ has been given the boot. It’s a dramatic shift for the carmaker that once wanted you to feel like you were driving a designer handbag. But in the face of falling numbers, Chinese rivals, and electric ambitions in need of a jumpstart, can this radical reboot bring Mercedes-Benz back to the front of the automotive catwalk?
From Luxury to Comfort: The End of an Era
Not so long ago, Mercedes and luxury were inseparable, with CEO Ola Källenius gleefully drawing parallels between his brand and high-end fashion houses like Hermès and Louis Vuitton. That now-famous ‘Birkin Bag’ metaphor wasn’t just a flight of fancy: for years, the idea was that sliding into a Mercedes should feel just as exclusive. Fast forward, and suddenly, you won’t catch Källenius uttering the word – he’s expunged ‘luxury’ from his vocabulary. In its place? Comfort and security. During the electric GLC’s premiere, he shifted the narrative: Mercedes should no longer simply be about status but evoke the sensations of safety and coming home.
This linguistic about-face reflects a wider strategic pivot. Källenius has also distanced himself from the previously hyped ‘electric only’ strategy by 2030. Yes, the brand once promised to go fully electric by that year. Now, however, Källenius argues that flexibility is key, raising doubts about Brussels’ policies and labeling the European ban on new combustion engines from 2035 as too rigid. His core message: zero-emission mobility remains the objective, but the route must be shaped by market realities – delivering a tone that’s more pragmatic but, compared to BMW’s laser-focused electrification push, perhaps a little rudderless.
The Hard Numbers: Why Mercedes Is Changing Course
Numbers don’t lie, and for Mercedes, they tell a sobering tale. Heading into 2025, prospects are less than rosy. Sales in China – once the golden engine of growth – slumped by 14% in the first half of the year. The S-Class, once the ultimate status symbol for China’s elite, is seeing its wealthy buyers swapping their loyalty to brands like Xiaomi, Huawei, or Xpeng, which offer comparable technology for a slice of the cost. The fallout? Shrinking volumes, squeezed margins, and a brand that can no longer count on its automatic prestige. Mercedes expects a meager four to six percent return this year, a sharp contrast to the fifteen percent margins of the pandemic’s golden era.
The Biggest Model Offensive: A Star Is Reborn?
To bring back the shine to its three-pointed star, Källenius is going all in on the biggest model offensive in Mercedes history: more than forty new models by 2027. The charge begins with the fully electric GLC, boasting over 700 kilometers of range and an 800-volt architecture – features designed to erase the headaches of e-mobility. Hot on its heels: an electric C-Class promising an 800-kilometer range, a reborn S-Class, compact GLB and GLA models, and even an all-electric E-Class to replace the underwhelming EQE. Insiders see the GLC as Mercedes’ potential turning point; if it flops, the chasm with BMW and Tesla may only get wider.
Far from ignoring the entry-level, Mercedes is plugging the gaps at the bottom of its lineup too. Axing the A- and B-Class sparked major criticism, especially since rivals are focusing on affordable EVs for youthful buyers. Källenius took note: the A-Class stays in production longer and will have a successor, even if it gets a different name. As sales boss Mathias Geisen summarized at the IAA, there will always be an entry-level Mercedes-Benz – a crucial fix for a brand keen to nurture lifelong loyalty.
- More than forty new models through 2027
- Focus on comfort and safety instead of overt luxury
- Extended life and a replacement for the A-Class
- Entry-level offerings to attract and retain new buyers
At the same time, Källenius is reshuffling his senior team. Longtime confidant Britta Seeger takes over HR, while Mathias Geisen has to fine-tune pricing strategy. In strategically-crucial China, Oliver Thöne is stepping up, and development chief Markus Schäfer may be heading for the exit after completing his work on MB.OS and new electric platforms. These moves show Källenius’ willingness to take drastic decisions, though internal pressure clearly mounts.
Stakes and Uncertainty – Racing Against the Clock
For Källenius, the stakes couldn’t be higher. His contract is extended in short bursts, and the supervisory board keeps a sharp eye on results—especially in China. Yet, he doesn’t appear overly worried. In a recent interview, he grinned as he described his appointment as merely temporary, emphasizing his focus on team success and building Mercedes’ future.
With the decision to drop the ‘luxury’ narrative and reposition the brand around comfort, security, and a sense of belonging, Mercedes is on a quest to rediscover its soul. But the road ahead is tight: margins are draining, China is drifting to domestic names, and Mercedes risks trailing behind in the electric race. If the forty-model offensive delivers, maybe the star will blaze bright once more. But there’s more than just a brand’s legacy on the line – it’s also Källenius’ own position.
John is a curious mind who loves to write about diverse topics. Passionate about sharing his thoughts and perspectives, he enjoys sparking conversations and encouraging discovery. For him, every subject is an invitation to discuss and learn.
