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Mercedes Selling $142,000 Model To Compete With Japanese

October 1, 1991

BIRMINGHAM, Mich. (AP) _ Mercedes touted a pricey new line of full-size cars Tuesday in an attempt to get a jump on Japanese luxury automakers and reverse a U.S. sales decline of more than 20 percent this year.

Despite problems, Mercedes is raising prices on the first all-new S-Class cars in 11 years by 25 percent to 50 percent. One of the models is priced well above $100,000.

Mercedes, whose U.S. sales through August this year were running nearly 22 percent behind last year, has been hurt by the recession, new taxes and Japanese competition.

″The Japanese also will move gradually upmarket. It is better to be prepared now,″ Mercedes Benz North America Inc. President Erich Krampe said.

In preparation, Mercedes this week will begin selling an all new S-Class of five new cars, two new models in the 300 Class, and 11 carryovers in the 190 Class, 300 Class and the two SL versions.

S-Class prices will range from $69,400 for the 300SD to $127,800 for the all-new 600SEL, with a six-liter, V-12 engine that gets 11 miles per gallon in the city and 15 mpg on the highway.

The prices don’t include gas-guzzler taxes between $2,100 and $4,500 and a luxury tax of 10 percent of the price of the car above $30,000. With those taxes, the top-of-the-line 600SEL will carry a base price of $142,080.

As the share of the luxury market shifts toward the Japanese and away from the Europeans, some analysts have said Mercedes is dodging the competition by creating an ultra-luxury class.

According to Jacobs Automotive Inc., which tracks the luxury car market in the United States, Europeans’ share dropped to 19.9 percent at the end of August, down 3.9 percentage points from a year ago. The Japanese share rose to 28.2 percent, up 5.4 percentage points.

The Big Three share at the end of August stood at 51.8 percent, down 1.5 percentage points from a year ago.

Krampe denied Mercedes was retreating. ″We are not fleeing the market at all,″ he said.

For 1992, Mercedes will offer cars priced between $28,950 for the 190E 2.3 sedan to the 600SEL.

Mercedes officials projected 1992 U.S. sales of about 69,000 cars, up from an estimated 65,000 this year but down from 78,000 in 1990. Mercedes will pay about $19.5 million in fuel economy penalties this year and about $22 million in 1992.

The company also said it did not expect any more European manufacturers to abandon the U.S. market. During the past two months, France’s Peugeot and England’s Sterling cars said they were pulling up their U.S. stakes.

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