Mercedes-Benz introduced the A-Class sedan in the U.S. in 2019, hoping to lure millennial buyers to the nearly century-old brand with a $30,000 entry-level model.
It was supposed to be a key gateway to the brand for younger buyers.
But waning consumer demand for cars and shifting corporate priorities are prompting Mercedes to ditch the compact sedan in the U.S. after the 2022 model year, the automaker said in a dealer memo obtained by Automotive News.
Despite hefty marketing, including a Super Bowl commercial, the A-Class struggled to find a solid footing in Mercedes' broad premium lineup and in a crossover-obsessed market.
"It launched as the market was continuing to shift to crossovers and SUVs," said Jeff Schuster, president of global forecasting at LMC Automotive. "From the start, it was fighting an uphill battle."
U.S. sales of the A-Class peaked at 17,641 when it launched in 2019. Mercedes delivered 8,108 units last year, down 47 percent from 2020.
The company declined to comment beyond the memo distributed to dealers.
Mercedes wants to quit chasing volume and move more upmarket, said Todd Bondy, operating partner at Mercedes-Benz of Oklahoma City.
"They want to focus on cars that are going to be profitable for the dealer and manufacturer," Bondy said. "The gross profit average was just never very good on the A-Class."