*This content was translated by AI.
Mercedes-Benz is facing a crisis as it experiences severe setbacks in electrification and sales stagnation simultaneously in China and the United States, the two major pillars of the global automotive market. In China, sales of new electric vehicles have collapsed amid aggressive moves by local brands, while in the United States, the company is facing pressure to completely revise its overall global business strategy as it struggles to meet its ambitious retail sales targets.
The most intense changes are occurring in China, the world's largest electric vehicle market. The all-electric CLA model, which Mercedes-Benz had positioned as a key card for its electrification transition, has been completely ignored by the market. This vehicle was planned and designed from the outset to target Chinese consumers. Despite deploying aggressive marketing with an infotainment system integrated with ByteDance's Doubao large language model (LLM) and locally tailored long-wheelbase models, it recorded severe underperformance, with monthly sales from February to May this year remaining at only a few dozen to around a hundred units. Consequently, it is reported that internal discussions are underway to even halt production of the electric CLA to manage high inventory levels. Mercedes-Benz is pinning its hopes on the all-electric GLC, based on a dedicated platform, scheduled for launch in July, but it finds itself in a precarious position where success cannot be guaranteed due to fierce competition with well-established Chinese local brands such as Nio, Li Auto, and Xpeng. Due to deteriorating profitability resulting from this, the Mercedes-Benz China subsidiary has already carried out two rounds of workforce reductions since early last year.
The situation in the U.S. market is also not easy. Mercedes-Benz USA (MBUSA) had set a long-term goal to leapfrog as the number one luxury brand in the United States by achieving annual sales of 400,000 units through pure passenger car retail sales alone. To this end, it has been pushing to expand volume, setting a short-term milestone of 325,000 units to be sold by the end of this year. While SUV lineup models produced locally, such as the GLE and GLC, have performed well, bringing the short-term target of 325,000 units within reach, the ultimate goal of "pure retail 400,000 units" remains a high barrier.
Passenger car retail sales in the United States have stagnated at around the 300,000-unit mark for several years, with competing brands BMW and Lexus rapidly expanding their market share and pushing Mercedes-Benz down to third place. Compounding this are tariff risks, intensifying competition over incentives, and economic slowdown, causing the timeline to reach the 400,000-unit milestone to be pushed back further than originally expected. While Mercedes-Benz is preparing a massive investment offensive to stabilize its supply chain, including launching local production of the GLC, a global bestseller, in the United States starting in 2027, analysts suggest it will take time to reverse the market's cold trend.
Global automotive industry experts evaluate that although Mercedes-Benz is preparing a massive product offensive and localization strategy, the challenges it faces on both continents are extremely heavy. Given that Mercedes-Benz cannot defend against the global sales decline with its existing capabilities centered on internal combustion engines alone, high-intensity restructuring and organizational improvement centered on responding to China's high-voltage software ecosystem and diversifying the supply chain in the United States have emerged as urgent tasks.
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*This content was translated by AI.
