New M-Class to head Benz SUV boom

Mercedes-Benz’s third-generation M-Class will be the first of at least six upgraded, new or additional SUV models to arrive here from the famed Stuttgart brand within the next few years.

Now on sale from just $81,400, the cheaper new M-Class is the first new Benz SUV to be charged with bolstering Mercedes’ small presence in Australia’s booming premium crossover market.

According to official VFACTS figures, to April this year BMW sold 504 examples of the X1, Australia’s most popular small SUV priced over $40,000, as well as 780 X3s, 124 X6s and some 798 X5s (making it the nation’s top-selling $70,000-plus large SUV), for total SUV sales of 2206.

German rival Audi has sold 121 Q3 mini-SUVs since launch in March, along with 936 versions of the country’s dominant $60,000-plus medium SUV, the Q5, and 296 Q7s, for total SUV sales of 1353. Audi expects to sell about 2800 Q3s this year – around the same number of Q5 buyers it attracted last year.

In the absence of a smaller SUV than the M-Class, however, Mercedes-Benz managed to sell just 536 SUVs in the same period, including 340 examples of the previous M-Class – sales of which were down by almost half, with only dealer stock remaining for the past three months – plus 91 GL-Class, 72 R-Class and 33 G-Class vehicles.

In other words, so far in 2012 Mercedes has penetrated less than six per cent of Australia’s luxury SUV market, which expanded by 12.3 per cent to 9374 sales, while its most direct competitors snared up to four times that, with BMW accounting for 23.5 per cent and Audi 14.4 per cent.

Benz says the MkIII ML will be the first in a series of redesigned or all-new SUV models to change all that, with Merc’s first ever four-cylinder SUV - the all-new ML250 BlueTec diesel variant –– expected to attract up to half of all new M-Class sales and up to half of them forecast to come from customers that would otherwise have bought another brand’s SUV.

“Lower pricing will translate to more conquest business,” says Mercedes-Benz Australia/Pacific senior corporate communications manager David McCarthy. “ML250 will pick up some X3 and Q5 buyers who want a larger SUV.

“Our competitors don’t yet know how to compete with it (the ML250). It’s priced between X3 and X5, so we’ll steal sales from both models and keep our traditional market.”

The ML250 BlueTec opens the new M-Class range at $81,400 plus on-road costs, making it $4380 cheaper than the old six-cylinder ML300 CDI it replaces at the bottom of the M-Class range and about $6500 more than flagship versions of the smaller X3 and Q5.

More significantly, the new ML250 undercuts its most direct competitors by about $10,000, with BMW’s cheapest X5 (the $92,100 xDrive30d) priced $10,700 higher and Audi’s $90,500 Q7 3.0 TDI costing $9100 more.

However, Mr McCarthy admitted that some ML250 customers would come at the expense of sales of other M-Class models.

“If we sell, say, 1000 ML250s, then 300 or 400 will be substitutional, but more than half will be incremental. They will pull people from a class smaller,” he said.

Mr McCarthy said the sharp ML250 pricing was a continuation of Mercedes-Benz Australia’s ‘customer first’ sales strategy, which sacrifices per-vehicle profit margins in the pursuit of greater sales volumes by lowering prices and increasing standard specification levels.

“We introduced the strategy with the C-Class and have had it on every model launched since. We said we want more volume, but we’re taking less profit on each model.

“We had to bargain really hard with Stuttgart, but to date it’s worked really well. Other markets have adopted it too, but we were the first to give it a red-hot go.

“Customers will ask ‘why am I paying a $10,000-$15,000 premium?’ We used to charge that premium, but that market’s smart.”

However, Mercedes admits the price of the ML250 – Australia’s only four-cylinder full-size luxury SUV – is partly a result of the fact the mid-size GLK continues to be unavailable in right-hand drive form for Australia.

“In a lot of ways this is our answer to not having GLK,” said Mr McCarthy.

Mercedes has confirmed the next-generation GLK will be available to Australians when it replaces the current model – a facelifted version of which was revealed at last month’s New York motor show – in late 2014.

Before then, next year will see a facelifted G-Class and second-generation GL-Class arrive here. Emerging on the same underpinnings as the new M-Class, the new GL made its global debut alongside the upgraded GLK in New York and will be launched in Europe in July.

A third M-Class-based SUV is also expected to emerge soon, in the form of the BMW X6-rivalling MLK, which will be produced in the US alongside the M-Class and GL-Class and could be released as an AMG-only model.

While a replacement for the current R-Class, which is officially classed as an SUV rather than a people-mover, is yet to be confirmed for production alongside the M, GL and MLK at Tuscaloosa, a sixth Mercedes SUV has been announced for production, based on the new A-Class.

Expected to be called the GLC, the all-new Mercedes mini-crossover will be based on the same new MFA platform that underpins this year’s new B-Class and the redesigned A-Class that will go on sale here in the first quarter of next year, following its European launch in July. While A-Class pricing will open from less than $35,000 for the first time, the GLC will be Mercedes’ first direct rival for the sub-$45,000 Q3 and X1 when it arrives here in 2014.

MFA will spawn two other additional small Mercedes models, including the coupe-styled CLA compact sedan that was previewed by the CLC concept at the Beijing motor show last month.

Due to be launched here next year after the A-Class, the CLA will be built alongside the B-class at Mercedes’ new passenger-car plant at Kecskemét in Hungary.

The fifth MFA-based model is yet to be confirmed, but motoring.com.au understands it will either be a new compact sedan aimed at the US or a small sub-SLK two-door sports coupe-convertible that could be priced from about $50,000 here.

“We don’t know was the fifth (MFA) model is because it hasn’t been locked in yet,” said Mr McCarthy.

The next new Mercedes-Benz passenger model to be launched in Australia will be the latest SL roadster in September, followed in 2013 by the all-new CLS Shooting Brake and next-generation S-Class limousine, which will form the basis for the CL-replacing S-Class Coupe.

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