Mercedes-Benz signaled it will reduce the number of compact models it offers in the next-generation range as part of a new strategy to focus the brand on larger, higher margin cars.
Cars such as the A- and B-Class had helped rejuvenate the brand but would not be the main priority for devoting resources in future, said Ola Kallenius, CEO of Mercedes parent Daimler.
“Maybe we went at a bit too far to cover each and every space into each and every segment. Compact particularly comes to mind,” Kallenius told analysts during on Tuesday during an online strategy presentation.
"This is not where the main thrust should go, we should not become a competitor of the volume makers," Kallenius said.
Mercedes sells eight compact models. Besides the A-Class hatchback and sedan and and B-Class minivan, the range includes the coupe-styled CLA, and GLA and GLB SUVs.
The models accounted for 25 percent of the brand’s 2.38 million sales last year, according to company data.
Kallenius, who succeeded Dieter Zetsche as Daimler CEO in May 2019 , aims to achieve a double-digit return on sales for Mercedes by 2025 by doubling sales of Maybach ultraluxury cars and increasing sales of AMG performance models.
“We have a great opportunity for horizontal growth, not adding more cars to the compact segment but finding more customer groups to come under the Mercedes master brand,” Kallenius said.