How Mercedes-Benz became so prestigious, and why it is challenged by a new era

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Mercedes-Benz can brag that it gave the world the first production automobile. It has long been an innovator, a relentless pursuer of quality and engineering excellence.

Many consumers say owning a Mercedes-Benz is a sign they have finally made it in life. It is considered one of the most aspirational brands among larger automakers — even by luxury car buyers who prefer cars from its competitors, according to research by industry survey firm AutoPacific.

But the automotive world is changing. Governments and a few consumers are pushing for electric vehicles, and companies are racing to develop new forms of transportation, including cars that can drive themselves.

Some of these new technologies, such as electric power trains, challenge Mercedes-Benz’s traditional strengths. After all, one of the things the three-pointed star was known for was its superior engine technology.

Mercedes-Benz, say some industry watchers, has been a bit slower than some to adapt to the electrification challenge. Mercedes-Benz said in early 2021 that it planned to delay the introduction of its EQC electric sport utility vehicle in the United States for the foreseeable future, even though SUVs are the most popular light vehicle in the American market today. The company said it still plans to release its electric sedan.

The German luxury brand and its traditional peers, such as BMW and Audi, also face challenges in the growing and extremely important Chinese market from electric upstarts like Tesla and Chinese makers such as Li Auto, according to some analysts. Historically, the three big German brands have controlled 60%of the luxury market in China, but that share is eroding as Tesla continues to open new stores in China, according to a report from Piper Sandler.

Mercedes-Benz has heritage, prestige, talent and a lot of experience in its favor. But the automotive industry is making some big pivots.

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