Mercedes, pulling in the reins, won't chase the luxury crown

Mercedes-Benz is neck-to-neck with BMW and Lexus in the race to be the 2010 U.S. luxury sales leader.

It's a closer race than we've seen in years. But Mercedes-Benz is pulling back the reins and won't spend wads of money the way it predicts its two archrivals will in the last weeks of December.

Four years ago, Lexus was 70,000 units ahead of Mercedes-Benz in the final weeks of the year. Year to date, Lexus is only 5,000 vehicles ahead, said Ernst Lieb, CEO of Mercedes-Benz USA. BMW was 40,000 ahead at this point in 2007 but now is only beating Mercedes by about 450 vehicles, Lieb said.

“Who will be No. 1?” Lieb wondered at Mercedes' holiday luncheon this week. “It will not be us because the other two are pushing so goddamn hard. We will be No. 3.”

According to the Automotive News Data Center, Lexus leads with sales of 201,769 through November, with BMW at 196,833 and Mercedes-Benz at 196,376.

Mercedes is more concerned with improving profits and enhancing the quality of sales and the Mercedes lineup. “We may not be No. 1” in any of the latest big quality surveys, “but we are among the 10 best,” Lieb said.

Mercedes is putting its money into a three-year ‘Autohaus' dealer facility upgrade program that ends this year. Lieb said 130 of 353 Mercedes dealers have built new or renovated showrooms and 150 dealerships are under construction. Dealers are investing $1.3 billion in upgrades, and Mercedes will pay them a combined $220 million in return. Mercedes dealers who invested in the plan will get $400 per car sold for three years and increased vehicle allocations.