are priced lower than Mercedes-Benz products, but offer strong perceived value for the dollar. The result is that Mercedes-Benz has had to reconsider its marketing strategy and find new ways to expand its market share given this new and successful competition.
In a surprising move, Mercedes-Benz announced in late 1993 that it would begin producing a sports utility vehicle, the first such addition to the company's product line. The vehicle will be produced in the United States, the first product by Mercedes-Benz to not be imported. The company expects to produce 60,000 units at its Alabama plant beginning in 1997, and will export a number of these vehicles to the company's traditional European and other markets.
The sport utility vehicle, as yet unnamed, will continue the company's commitment to product cycles of at least eight years. Such long cycles are perceived by the company as offering better safety, quality and technical features, and help maintain the owners' investment in the vehicles because the resale value remains high.
Mercedes-Benz also plays down the idea that it sells German cars. Its vehicles are manufactured in 47 countries, although the sport utility factory in Alabama will be the first American plant. The company believes in marketing "German engineering," an idea that is put across in its promotional material, rather than in "German cars." The sports utility vehicle is expected to have 70 percent American components, which makes it more American than German in terms of its materials, but the company will position it as German-engineered, building on the company's reputation in that area.
When the sports utility vehicle is introduced in 1997, it will be entering a mature market, although the Mercedes-Benz entry will be in the introductory stage of its lifecycle. The vehicle is classified as a car by internal company standards, but may be considered as a truck in order to meet the regulations of ...