HUNTSVILLE, Ala. - The base model of the new Mercedes M class will be priced below $35,000 and yield dealers a gross profit of about $5,600 per vehicle, Mercedes-Benz of North America Inc. officials said at the press introduction here.
'I think you will find the price is not only surprising, but we think it is downright amazing,' Mercedes-Benz of North America Chairman Michael Bassermann said.
With add-ons like leather upholstery as part of a package, however, the price will be closer to $40,000.
The first M-class model, due in U.S. dealerships in early September, will be the ML320. It will be powered by the same new V-6 that goes in the U.S. E class for the 1998 model year. A V-8 model, probably badged ML430, will appear next year.
Europeans will get the ML320 next spring.
About 300 U.S. dealers are expected to get the M class, which means about 25 dealers will not. To qualify, dealers have to meet factory standards for facilities, for customer satisfaction scores, and for exclusive Mercedes showrooms in the top 50 or so markets.
$800,000 PER YEAR
Dealers who make the cut can expect an average gross profit of $800,000 a year from M-class sales, said Fran O'Hagan, product manager for light trucks. But to satisfy the extra demands to get the M- class franchise, dealers spent an average of $1 million each, he said.
O'Hagan said it should not take dealers long to get back their investment because dealership improvements and other new models should improve sales, over and above the M class dealer gross margin. Eventually, he said, all dealers probably will qualify to sell the M class.
The M class plant in Vance, Ala., is expected to reach full-speed production of 65,000 units a year in spring 1998. Half are earmarked for U.S. sales.
The company wants to get about 4,500 units in dealer hands in time for the U.S. launch. Mercedes expects U.S. sales to total about 12,000 units this year.
TAKING ON CHEVY, FORD
The base price of the ML320 puts it in competition with higher-volume sport-utilities like the best-equipped Ford Explorers and Chevrolet Suburbans.
Bassermann said the premium sport-utility segment is the fastest growing piece of the fastest growing segment, sport-utilities.
Sport-utilities make up 46 percent of the entire U.S. light-vehicle market over $28,000, including cars and trucks, Bassermann said.
'In the early 1990s our research showed one-quarter of our owners already leased or owned a sport-utility,' Bassermann said. 'There's no reason that other car shouldn't be a Mercedes-Benz.'
Officials here said the automaker is considering a minivan specifically for its U.S. lineup. But they said discussions are preliminary.