Even though I tipped the Audi Q3 to win the compact crossover sales race, a story in Automotive News highlights another problem that Mercedes, and other luxury brands, could face: a lack of inventory.
Back in the spring, a source at Lexus told TTAC that one of the biggest issues with the upcoming Lexus NX would be getting allocation. While the United States was expected to be the biggest market or the NX, China would also be competing for volume. The fact that the NX could be sold at a much steeper sticker price in China meant more profit for Lexus, and a stronger case for allocating more units to that market.
Now, AN is reporting on a similar situation for the Mercedes-Benz GLA. The outlet reports that Mercedes CEO Steve Cannon said
“…the United States is competing for vehicle allocation with China, where demand is equally strong. The United States is Mercedes’ largest market, but China is likely to become No. 1 next year…”
While the GLA and its twin, the CLA, are built exclusively in Hungary, and the Lexus NX is built exclusively in Japan, the Audi Q3 is built in three factories, including one in China, while the BMW X1 is also built in multiple factories worldwide, with its own Chinese assembly location. Both the Q3 and GLA will have North American production in the near future, with factories in Mexico, but neither Daimler nor Volkswagen have completed building those plants.
The lack of diversity in assembly locations could lead to a bottleneck in supply for both the GLA and the NX. For dealers in the United States, this means a hot product that has little room for negotiation thanks to outsized demand and little supply. But you can be sure that the American sales and marketing arms of Mercedes and Lexus will be clamoring for every single unit they can get.
Now we’ll get to see which name badge the Chinese desire more.
I’m betting it will be Mercedes.
Good deal. Send them All over there.
I wonder if Chinese buyers care where their luxury vehicles are produced?
Back when Mercedes and BMW started production at plants in the US South, I heard a lot of skepticism about quality decline in fit/finish/reliability; likewise, I still hear a lot about US-made Toyotas being inferior to their Japan-built counterparts. Not to mention anything built in Mexico being perceived as lesser in the US…
Maybe there’s less cache attached to where the factory is for the Chinese market, but these vehicles are aspiration luxury items, and likely represent a huge investment and a great deal of status to potential buyers in China. Does the Mercedes badge carry more weight when assembled in Europe? Will Lexus be seen as higher quality per their Japanese assembly than China-made Audis and BMWs?
That Mercedes GLA is hideous; the Chinese would be doing my eyes a favor if they purchased every single one
I still say you need to put the 2015 Lincoln MKC on the list of your luxury crossover sales race. It may be off your radar but it is flying stealth.