G-Wagen piles on luxury sport-ute heap

DURHAM, N.C. - The oldest Mercedes, the G class, is jumping on the growing pile of models at the high end of the sport-utility segment, including entries from Porsche, Lexus, Land Rover, BMW and Hummer.

The 22-year-old G class - short for Gelaendewagen in German - is new only in the U.S. market. The sole U.S. model for the 2002 model year is the G500 with a 5-liter V-8 at $73,165 suggested retail, including a $665 delivery charge. U.S. sales begin in December. A version souped up by the high-performance AMG division also is likely within a year. It probably will be the G55 AMG, with a 5.5-liter engine and sportier trim and suspension.

In 1979, the present G class began life as a strictly utilitarian German military vehicle, largely hand-built in Graz, Austria. An independent distributor, G-Wagen U.S.A., in Santa Fe, N.M., sold a handful in the United States, with leather interiors and top-of-the-line trim and equipment.

Vince Piarulli, G-class product specialist for Mercedes-Benz USA Inc., says the distributor sold fewer than 1,000 units in the last decade, at much higher prices than the 2002 G500. Mercedes expects to sell about 2,500 G-class units in 2002.

Optimistic forecast

Sales of sport-utilities costing more than $28,000 went from about 545,000 in 1995 to about 1,450,000 in 2000, according to analyst Susan Jacobs of Jacobs & Associates in Rutherford, N.J.

That growth has slowed sharply, and the number of entries has increased since 1999, she says. Jacobs forecasts sales for the total segment will increase only about 5,000 this year. She says segment growth will be slow again next year.

"I think everyone in that segment, even the G class, will have trouble making the target volumes they're citing for next year," she said.

"That's not to say they're not a good idea long term. Demographics will be favorable when the market comes back, say in 2005 or whenever it is. Baby boomers will be in their empty-nest phase."

The Porsche Cayenne is due next year, and so is a redesigned Range Rover and the production version of the Hummer H2 concept vehicle.

In 2004 Lexus expects a redesigned RX 300, and Infiniti expects a full-sized sport-utility.

M class connection?

The Mercedes M class, introduced in September 1997, was conceived as a replacement for the Gelaendewagen, more suitable for U.S. tastes than the clunky original.

Paul Halata, CEO of Mercedes-Benz USA, says he doesn't expect to see the present G class more than another two to 2 years. A redesigned M class is not due until around 2005, but a replacement could come sooner if Mercedes speeds up its eight-year cycle. Mercedes isn't saying whether a new M class and a new G class would share development.

The leather-lined 2002 G500 has a new interior and high-tech features such as electronically controlled traction control, yaw control and satellite navigation.

Piarulli says the target audience for the G class is younger and wealthier than M-class customers - age 44 for the G500 compared with 50 for the ML500, and a median income of $353,000 for the G500 compared with $182,000 for the ML.

You can reach Jim Henry at autonews@crain.com

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