Mercedes-Benz readjusts expensive pricing approach, plans for a wider customer demographic reach
Mercedes-Benz Shifts Strategy Away from Traditional Luxury Approach
German automaker Mercedes-Benz is reportedly modifying its approach to pricing and positioning, aiming to distance itself from the controversial term "luxury" while maintaining a strong presence in the market.
According to a report in the newspaper "Handelsblatt", Mercedes-Benz is rebalancing its volumes and prices internally, with a broader vision for the brand. The goal, as stated by CEO Ola Källenius, has always been to offer the most desirable product in each of its segments.
The strategy does not involve a departure from its economic strategy, as Källenius clarified. Instead, Mercedes-Benz is softening its premium pricing strategy, maintaining high average transaction prices (ATP) while increasingly relying on higher incentive spending to support sales and keep vehicles affordable for consumers.
This approach balances elevated sticker prices with substantial discounts to maintain sales volume amid tariff-driven cost pressures and competitive market dynamics. Mercedes-Benz, along with other luxury brands like Porsche and Lincoln, recorded year-over-year ATP increases more than twice the industry average, reflecting the brand’s ability to command higher prices due to its affluent customer base and strong brand positioning in the premium segment.
In July 2025, incentive spending reached a peak with a 7.3% incentive rate (about $3,553 per vehicle) — the highest level in 2025 — helping maintain affordability and clear inventories ahead of incoming 2026 model year vehicles.
The brand is also leveraging its position to introduce innovative products and technologies. For instance, the 2026 CLA luxury sedan integrates advanced in-car productivity technologies, such as Microsoft Teams meetings while driving, supporting premium pricing through added value and differentiation.
The aim is to maintain a balanced approach in sales and pricing, ensuring solid factory utilization and sales of more than two million units per year, as per the plan. Mercedes stands for uniqueness, according to Källenius, and the strategy does not involve abandoning its existing customer base.
The term "luxury" had caused significant polarization among employees and customers, and Mercedes-Benz is reportedly no longer focusing solely on operating like a luxury brand in its dominant car division. The focus remains on maintaining a strong presence in the market, with a strategy that reflects the brand's strengths and innovations.
[1] Handelsblatt, Mercedes-Benz adjusts pricing strategy, 2025 [2] Mercedes-Benz financial guidance update, 2025 [3] Mercedes-Benz unveils 2026 CLA luxury sedan with advanced technologies, 2025
- Mercedes-Benz, keen on maintaining a strong presence in various sectors, is adjusting its pricing strategy to distance itself from the controversial term "luxury," while focusing on the automotive industry, finance, and transportation.
- In the finance sector, Mercedes-Benz has been relying on higher incentive spending to support sales, keeping vehicles affordable for consumers and ensuring solid factory utilization, as part of their strategy to sell more than two million units per year.
- Looking towards the future, Mercedes-Benz is leveraging its position to introduce innovative products, such as the 2026 CLA luxury sedan, which features advanced in-car productivity technologies, expanding its presence in the business segment through added value and differentiation.
