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Mercedes making aggressive plans for Chinese market

Mercedes-Benz is preparing a major product offensive to counteract lagging sales in the Chinese market, aiming 20 new or updated models at the People's Republic in the next two years, according to a report by Reuters. The plan is part of MB's so-called 2020 Initiative, which will see the Stuttgart-based manufacturer dump 2 billion Euros ($2.67 billion) into its Chinese market vehicles in a bid to boost sales to 300,000 units by 2015.
Were it to succeed, China would become the largest market for the Silver Arrow, outpacing Germany and the United States. Leading the charge will be the redesigned E-Class, which is set to launch in China this week. That will quickly be followed by the S-Class, and eventually by the GLA-Class in 2014.
Mercedes has struggled in China, especially relative to its German competition, BMW and Audi. Where Mercedes saw a mere four-percent increase in 2012 sales to 206,150 units, Audi was up a staggering 32 percent, while BMW's numbers jumped 41 percent. While some voices, according to Reuters, accuse Munich and Ingolstadt of boosting their numbers through hefty incentives, the fact remains that Mercedes was just walloped by its competitors last year.

Is Audi getting complacent and suffering from brain drain?

The argument is made in a Reuters article: Audi is falling behind other luxury brands, such as Mercedes-Benz and BMW, due to a lack of research-and-development spending and "brain drain," or the migration of top executives and R&D chiefs to other parts of the Volkswagen Group. Reuters notes that Audi's current R&D chief is the third in 16 months.
Audi, which contributed to 40 percent of VW Group's $11.6 billion in profit the first nine months of the year, is delivering cars at a record pace: 1.31 million were delivered from January to October 2013 versus BMW's 1.35 million. Yet Audi, Reuters reports, doesn't have a halo car akin to BMW's new electrified i3 and i8 or an answer to Mercedes' plug-in-hybrid S-Class, and the R&D spending at Audi is less than BMW and Mercedes by a fair margin. It's noted in the article, however, that Audi benefits from other R&D spending within VW Group.
Reuters mentions that BMW "trumpets its new 'i' series" and the new Mercedes CLA and GLA ranges are winning "rave reviews" as part of its argument that Audi's recent lack of technological innovation could hurt future sales. Those cars do pack tons of new technology, some of which are firsts for mainstream production cars. But last time we checked, the i3 could be causing BMW's stock to slide, the CLA isn't receiving the rave reviews that Reuters would have you believe and the GLA hasn't been reviewed yet.

Mercedes mulling Renault-based entry-level X-Class?

Somewhere in between the Smart brand and the all-new A-Class (pictured above), Daimler is said to be readying a smaller entry-level product for the Mercedes-Benz brand to compete with models like the Audi A1. According to AutoBild, Mercedes-Benz will get a new hatchback based on a platform from its recent partnership with Renault-Nissan, and it could be called the X-Class.
Expected to debut by 2018, the Mercedes-Benz X-Class could be offered in sedan, hatchback and crossover variants, and it would likely have a starting price below the $20,000-euro mark. Power would come from either a 1.0-liter inline three-cylinder engine or a 1.5-liter inline-four, and the car would likely be built in a low-cost nation in order to make the financials work. Wearing the Mercedes-Benz name, the X-Class would have to exhibit more distinguishable luxury and styling to set itself apart from the models that helped provide its underpinnings.