Pick-up trucks can be very profitable. The compact ones are still a niche market, which means they usually have little competition. Midsize models are developed alongside an SUV, so they can combine lots of content and low production cost. Finally, the large ones are derived from one core project in several sizes, so the automaker can cater to many, many types of customers at once. Nevertheless, it goes without saying that there are also some important challenges when it comes to making them prosper.
The X-Class arrived in 2017 as Mercedes-Benz’s very first midsize pick-up truck. It was developed from the beginning alongside the also new Renault Alaskan and the latest generation of the Nissan Navara/Frontier, but each one received trim and powertrain options of its own: the model offered under the Japanese brand got the cheapest and most utilitarian variations, while the French one stood a step above it. The German sister featured exclusive equipment of both types and the deepest visual changes.
What exactly happened with them?
While the three were praised for their qualities, the Nissan model has been the only one to actually perform well in the market. The Alaskan has been available in some key markets and has obtained discreet sales, while the X-Class failed so badly that the first rumors about its demise started in mid-2019, only two years after its release. They became stronger after the company decided not to sell it in North America and even stronger when it cancelled the plans to produce it in Argentina for Latin America, both key markets.
Lately, Mercedes-Benz has officially stated that it’ll effectively end the model’s production by next May after fulfilling the existing demand — so far, nothing has been said about the other two. The circumstances make this news hardly surprising, but it’s always impressive to see such negative outcome in times when automakers research more deeply than ever to create the most effective sales strategies. On the other hand, when you take a closer look to what was done, the flaws become rather easy to spot.
What did Mercedes-Benz do wrong?
Production quality is something any company can reach if it’s willing to accept the necessary costs; what truly makes luxury marques stand out is their image. Clothes, drinks, electronics, food, jewelry… they only attract wealthy customers if they seem prestigious to them; if they distinguish them in desirable ways. One way to prove the same happens with cars is the fact that all luxury offerings are heavily based on visual distinction. Some makers have created a whole division with exclusive attention to their buyers.
Having that in mind, one can say the X-Class’s biggest misstep was the subpar image. Not only does it share platform with generalist models, it doesn’t really try to hide it. Many people perceived it as nothing but a Navara with exclusive engines, fancier trim and much higher price tag. It offers too little to convince pick-up buyers to leave traditional options such as the Ford Ranger and the Toyota Hilux, not to mention the very Navara, and too little to convince typical Mercedes-Benz buyers to try this new model.
Did similar cases get similar outcomes in the past?
Pretty much. Back in the 1980s, GM was having a blast with the global car “experiment”. One of the models which got to be badge-engineered around the world was the third-generation Opel Ascona, and one of the siblings it spawned was the Cadillac Cimarron. Even though the world was still dialing down its car standards because of the oil crisis, conservative styling and even more conservative trim were too little to convince people to buy a Caddy which was sold for much less under other brands.
In the 2000s, Ford was toying with its brand new luxury division created after the acquisition of Jaguar, Land Rover and Volvo. While the plan was to preserve their image above the generalist Ford and Mercury, the part-sharing possibilities were simply too hard to resist. The X-Type was quickly seen as a spruced-up Mondeo, although that wasn’t entirely fair, and ended up getting sales figures which embarrassed the company up to the end of its production.
How can we do that right, then?
There’s no magic when it comes to money: while badge engineering slashes production costs, it’s simply not worth the effort if the resulting car models don’t get appropriate image work. The fancier the intended cars are, the more complex such work must be so as to have actual chances of success. That notion is precisely why the X-Class surprised public and media since it was an unreleased project and, sadly, precisely why it was met by public and media with low expectations from the beginning.
When it comes to luxury cars, developing them appropriately with badge engineering frequently demands investments large enough to overcome the potential savings. As a consequence, the most advisable way to apply this strategy with them is… not doing it. Had Mercedes-Benz invested in an exclusive product, it could’ve derived it from one of its SUVs and slowly create more options derived from the others. That would mean actually venturing into the pick-up world without ceasing to be Mercedes-Benz.