Mercedes-Benz and luxury: for years, these two seemed as inseparable as peanut butter and jelly (or should we say, caviar and champagne?). But tune in now, and you’ll find the air of elitist status wafting out the windows—and a surprising new breeze blowing in. Is a radical rebrand enough to rescue the iconic star?
A Silk Scarf Turns Into a Security Blanket
For ages, Mercedes’ CEO Ola Källenius was keen to align the brand with high-fashion labels like Hermès and Louis Vuitton. Remember that famous Birkin Bag metaphor? Mercedes should ‘feel like an exclusive designer handbag,’ he insisted. High status, exclusivity, luxury—these were the words that wrapped Mercedes in a silk scarf of desirability.
Not anymore. Something significant has shifted. Källenius no longer utters the word « luxury. » Instead, he talks about « comfort » and a sense of « security. » At the pre-launch of the electric GLC, he hammered home that a Mercedes should now be about safety and that all-important feeling of coming home—not about raising social eyebrows at the valet station.
Flexibility Over Flash: Rethinking Strategy
This vocabulary change reflects a broader pivot. Källenius has even distanced himself from Mercedes’ previously trumpeted « electric only » strategy for 2030. Where once the company boasted it would be fully electric by the end of this decade, the message now calls for more flexibility. With a direct challenge to Brussels, the CEO labeled Europe’s post-2035 combustion ban as too rigid.
So, while zero-emission mobility remains Mercedes’ north star, the route there should be driven by the market, says Källenius. The result? Mercedes sounds more pragmatic than ever—but compared to BMW, which is charging ahead with electrification, it might also seem like they’re navigating without a clear map.
Why this sudden change of lane? The numbers don’t lie. Heading into 2025, Mercedes faces choppy waters. Sales in China, once the gentle tide that floated the brand ever higher, plummeted by fourteen percent in the first half of the year. Where the S-Class used to be the status symbol for China’s elite, affluent customers now opt for Xiaomi, Huawei, or Xpeng—comparable technology, but at a fraction of the price. Downtuned sales, shrinking margins, and a brand that’s lost its default status—that’s the harsh reality.
The forecast for this year: a 4–6 percent return. That’s a stark contrast to the glory years during the pandemic, when margins soared as high as fifteen percent.
Supercharged Model Offensive: Mercedes Fights Back
To polish the three-pointed star, Källenius is launching the largest model offensive in company history. Over forty new models are planned by 2027. Kicking things off is the fully electric GLC, boasting more than 700 kilometers of range and 800-volt architecture—targeted at smoothing out the rough edges of electric mobility.
Hot on its heels: an electric C-Class with an 800-kilometer range, a new S-Class, compact models like the GLB and GLA, and even an electric E-Class to replace the EQE, which didn’t quite electrify expectations. Some insiders see the GLC as a make-or-break moment. If it doesn’t succeed, Mercedes could fall even further behind BMW and Tesla.
Mercedes isn’t just playing in the big leagues; it’s patching holes at the entry level, too. The decision to axe the A- and B-Class met with loud criticism, especially since competitors are focusing on compact EVs for young buyers. Källenius has taken heed: the A-Class will stay in production longer and will have a successor—name pending.
As Sales Chief Mathias Geisen summarized at the IAA, there will « always be an entry model in the world of Mercedes-Benz. » For a brand that aims to keep customers for life, this correction is crucial.
- More than forty new models by 2027
- Electric GLC launched as the new frontrunner
- A renewed focus on accessible entry models
Changing of the Guard—and the Feeling
Källenius isn’t just revamping products; he’s shaking up the team. Trusted executive Britta Seeger has shifted to HR, while Geisen sharpens price strategy. In China—a market pivotal for Mercedes’ future—Oliver Thöne arrives on the scene. Even development chief Markus Schäfer may be heading for the door, his tasks evidently accomplished.
With internal pressure mounting, Källenius’ own position hangs in the balance. His contract is now renewed for short durations, with the supervisory board watching results—especially the Chinese ones—like hawks eyeing prey. Yet, publicly, he downplays any concern, recently quipping with a smile that his appointment is « only temporary. » His focus, he assures, lies with team success and Mercedes’ future—not his own job security.
Is Comfort Enough to Ignite the Star?
By ditching the luxury narrative and repositioning around comfort, safety, and belonging, Mercedes is out to recover its soul. But the deadline is looming: margins are slipping, Chinese buyers are jumping ship to local brands, and in the electric race, Mercedes is trailing.
Will the forty-model offensive be enough to reignite the Mercedes star and, just maybe, save Källenius’ spot at the helm? Or will the quest for comfort leave them, well, just out of their comfort zone? Time—as always—will tell.
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.
