It’s unusual to reverse course on a major manufacturing program in just two years, noted Jeff Schuster, president of global forecasting at LMC Automotive.
“There’s cost involved in doing that,” Schuster said. “There’s sunk cost in tooling, training and configuration of the line.”
The production pullback also shines a spotlight on the new and underutilized Daimler-Nissan assembly plant in central Mexico. The factory, which launched in late 2017, last year built 90,408 vehicles — or less than 40 percent of its more than 230,000-vehicle capacity.
In addition to the Mercedes models, the 3 million-square-foot Aguascalientes factory builds Infiniti’s QX50 and QX55 crossovers. But the QX55, a new model, has suffered production delays, pushing its planned U.S. launch to next year. And plans for an unidentified luxury compact vehicle that was to be co-developed by Daimler and Infiniti and built at the factory have been scrapped, as consumer tastes have migrated to more practical crossovers.
Automotive News reported more than a year ago that Mercedes also planned to pull C-Class production out of its plant in Vance, Ala., to make room for utility vehicles.
That consumer trend also is driving Mercedes to shift its capacity from the A-Class to the GLB, analysts said. The luxury compact-sedan segment’s share of the U.S. light-vehicle market was 1.9 percent last year, tumbling nearly 40 percent since the end of 2015.
There is less benefit for Mercedes to tie up production with an entry-level sedan, especially in a market that’s moving toward crossovers, noted Sam Fiorani, vice president at AutoForecast Solutions.
“Production of the GLB crossover is much more important to the company’s bottom line than the A-Class sedan, which couldn’t generate the same kind of revenue,” he said.
According to Fiorani, the Mexico assembly plant had been on pace to build about 96,000 GLBs this year, before the coronavirus pandemic upended production schedules and demand expectations. In comparison, the factory assembled 40,434 A-Class vehicles last year.
The A-Class, featured in Mercedes’ Super Bowl ad last year, was marketed as a millennial vehicle that would bring Mercedes a new generation of customers.
But the sedan arrived in U.S. stores later than expected, and it struggled to differentiate from the CLA sedan, dealers said. Mercedes sold 17,641 A-Class sedans last year.
