Daimler Risks A Lot With a Miniature Mercedes image

Analysts believe that if Daimler plans to make a miniature Mercedes, it will have to keep volumes up and costs down to see profit.

As Mercedes is far behind its German rivals BMW and Audi in terms of profitability and sales, it relies on the new subcompact it prepares that will compete with VW Polo, Opel Corsa and Renault Clio. Although buyers in this segment are attracted by lower prices, Audi’s A1 and BMW’s Mini have proved that customers are ready to pay more for subcompact which offers style and quality.

Although Daimler has the Smart microcar, which is smaller than a subcompact, its smallest model is in fact the Mercedes A-Class, which rivals the BMW 1-series and the Audi A3. A German newspaper reported on Sunday, April 14th, that Daimler plans to create a new model, due in 2016, which will be positioned above the Smart, with engines from its partner Renault and based on the flexible A-Class architecture.

“We’ve never made a secret about the fact that every once in a while we examine whether there is room below the A-Class for another Mercedes model,” said Daimler’s spokesman.

Analysts estimate that the premium subcompact segment in Germany will increase from around 70,000 units this year to 120,000 units in the following five years. Stefan Bratzel from the University of Applied Sciences says that in order to be profitable in such a competitive segment, Daimler has to keep costs down and volume up, and its partner Renault-Nissan will have an important role in this plan.