The A-Class sedan was marketed to bring new, and younger, customers to Mercedes.
Mercedes-Benz introduced the A-Class sedan in the U.S. in 2019, hoping to lure millennial buyers to the nearly century-old brand with a $30,000 Benz.
It was supposed to be a key gateway to the brand for younger buyers.
The A-Class "will do really, really well ... for us," then-Mercedes-Benz USA CEO Dietmar Exler declared in 2018 ahead of the launch.
But waning consumer demand for cars and shifting corporate priorities are prompting Mercedes to ditch the compact sedan in the U.S. after the 2022 model year, the German automaker said in a dealer memo obtained by Automotive News.
Despite hefty marketing, including a Super Bowl commercial, the entry-level A-Class struggled to find a solid footing in Mercedes' broad premium lineup and in a crossover-obsessed market.
"It launched as the market was continuing to shift to crossovers and SUVs," said Jeff Schuster, president of global forecasting at LMC Automotive. "From the start, it was fighting an uphill battle."
U.S. sales of the A-Class peaked at 17,641 when it launched in 2019. Mercedes-Benz delivered 8,108 A-Class vehicles last year, down 47 percent from 2020.
The company declined to comment beyond the memo distributed to dealers.
Mercedes wants to quit chasing volume and move more upmarket, said Todd Bondy, operating partner at Mercedes-Benz of Oklahoma City.
"They want to focus on cars that are going to be profitable for the dealer and manufacturer," Bondy said. "The gross profit average was just never very good on the A-Class."
The A-Class sedan is powered by a 2.0-liter turbocharged inline four-cylinder engine producing 188 hp and 221 pound-feet of torque. A more powerful AMG variant — the A35 — went on sale in 2020.
Despite the entry-level price, the A-Class launched with a new infotainment system and advanced driver-assistance technologies to appeal to younger customers.
The A-Class introduced the Mercedes-Benz User Experience multimedia system featuring improved speech recognition capabilities, artificial intelligence and predictive learning abilities.
Mercedes had doubts about the viability of a small sedan in the U.S. from the start.
The automaker initially hesitated to bring the A-Class to the U.S. because of its size. But the success of the CLA compact, introduced in 2013, showed that U.S. consumers would embrace a smaller sedan.
U.S. dealers have questioned the wisdom of having multiple compact sedans in a shrinking car market.
A sign Mercedes was evaluating the future of the A-Class in the U.S. came in 2020, when the automaker said it would move production of the sedan from Aguascalientes, Mexico, to Rastatt, Germany. Mercedes' focus at the Mexico assembly plant, known as COMPAS, is now the GLB crossover.
The car's discontinuation comes as Mercedes looks to trim its bloated U.S. product portfolio, which one dealer has compared to the menu at a Cheesecake Factory restaurant.
The brand's lineup has nearly doubled to 15 nameplates since 2000. Including engine variants and body styles, the lineup in the U.S. has ballooned to more than 100 versions.
"Model proliferation for Mercedes has gotten to be too much," Bondy said. "It's hard for dealers to stock everything."
In the memo to dealers, Mercedes said the GLA compact crossover will take over as Mercedes' entry-level model. The automaker also said the A-Class' larger sibling, the CLA sedan, will continue for the 2023 model year.
But Bondy doesn't expect the CLA to stick around in the U.S.
"People don't buy sedans anymore," he said.
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