What’s Going On at Mercedes-Benz?

There is a reason auto executives are careful not to talk smack (at least publicly) about their competitors when they are down. In the cyclical auto industry, it is normal to be on top one minute, struggling the next, and then back up on top. It doesn’t matter how big or storied the brand, everyone rides the wave.

In recent years, Toyota was seen as a laggard because it slow-played an EV strategy, while Honda was embracing the new world order with gusto. Now Honda is the one struggling with a major investment deemed premature and Toyota, with its hybrids, is on top. Volkswagen is another company that experienced difficulty, followed by Nissan and Stellantis. All are restructuring.

Mercedes-Benz lost its sales leadership in key markets and is launching its largest product onslaught ever, with 40 new or updated models over the next three years. “I can’t remember in my 33 years in the company that we have had this many launches ever,” said chairman of the board of management and Mercedes-Benz Group CEO Ola Källenius. “That includes AMG, which is growing at a pace never done before.”

The hope is it is enough to get the luxury maker back on top. In the U.S., BMW has been the top-selling luxury brand for the last seven years and in 2025 sold 388,897 vehicles, with Lexus a close second at 370,260 and Mercedes-Benz a distant third at 303,200. BMW was also the global sales leader, with Mercedes-Benz second.

2027 Mercedes-Benz GLS.

Ambitious Sales Goals

Mercedes has ambitious goals of selling 400,000 vehicles a year in the U.S. by the end of the decade.

Adam Chamberlain, CEO of Mercedes-Benz USA, remembers when Mercedes was number one in the U.S. more than a decade ago, before BMW knocked its competitor off the throne in 2014. BMW accelerated harder out of a period marked by exploding Takata airbags, GM’s ignition switch crisis, Fiat-Chrysler drama, and Tesla plans to build a battery gigafactory.

The industry is currently reeling from six years of crisis, dating back to the pandemic. Mercedes wants to use these unpredictable times to its benefit. “This is a particularly intense phase in the transformation of the company in the market, and we intend to take advantage of it,” Källenius tells MotorTrend in an exclusive interview in Tusclaoosa, Alabama, where Mercedes unveiled the new 2027 Mercedes-Benz GLE and 2027 GLS.

Mercedes is focused on its core products. “If I look back a couple of years ago, on our GLC, GLE, and GLS, BMW outsold us by nearly 60,000 cars with a very similar product portfolio, similar strong German premium brand. We should be able to do similar levels, simple logic tells me, without much work,” Chamberlain says, with an all-new GLC and significant updates to the GLE—the bestseller in the U.S.—and the GLS. “We were 55,000 behind BMW two years ago on those three cars alone. Our cars are certainly comparable on any measure, so we don’t deserve to be that far behind. That’s on us.”

All-new 2027 Mercedes-Benz GLC EV.

Volume must come from these bread-and-butter SUVs. But it is also important to retain top-end share with brand-defining names such as the S-Class, AMG, and Maybach. The new 2027 S-Class goes on sale this fall. Also on tap this year is the Mercedes-AMG GT, an electric four-door hypercar, and we will see the first of two SUVs to come from the same AMG.EA platform for electric performance vehicles. Mercedes has also addressed the need for strong entry level models with new platforms for the CLA, GLA, GLB, GLC, and C-Class.

2027 Mercedes-Benz GLE.

Powertrain Strategy

The powertrain approach will involve a mix: internal combustion engines with mild hybrids, plug-in hybrids, and pure EVs, says Källenius. He says there is no need to lose sleep over inaccurate forecasts of EV growth made five or six years ago that led to big investments and lost resources. Everyone was wrong in their predictions and now the whole industry is being transformed. But leaving the segment with plans to re-enter later would have been the wrong choice for Mercedes because it would not allow the company to return at an elite and competitive level compared with those who stayed in the game.

Mercedes is sticking to its original plan to offer an EV choice for most model lines by the end of the decade because it is a necessity in some markets. The automaker has developed new platforms for electric vehicles to appease EV loyalists. “We had 10,000 BEVs [battery electric vehicles] come off lease last year and 40 percent bought another one,” Chamberlain says. There are also customers who want plug-in hybrids, especially now that they offer 60 miles of electric range. Higher gas prices are not pushing consumers to EVs so far, but that could change if the war in Iran proves lengthy and oil supply remains a geopolitical issue, executives say.

Mercedes is not planning successors to the EQE and EQS per se, but the GLC EV is on the same platform and should appeal to EQE customers while the EQS will continue to be offered and receive mid-cycle upgrades to keep it relevant and competitive, Chamberlain says.

Mercedes is taking the same approach on the internal combustion engine side in not letting the competition gain an edge. The company has invested in new four- and six-cylinder engines as well as a new family of V-8s with a flat-plane crankshaft that meets future emission requirements.

300,000th Mercedes-Benz G-Class.

Renewed Focus on North America

There is a renewed focus on North America, Chamberlain says. The V-8 family is directed at the U.S. as are pending products that will use the engines, such as a new CLE63 for which 95 percent of sales will come from North America. There are another two or three all-new models on a new platform in the works specifically for America, he says, without providing details.

We know there are two highly anticipated models in the works: the G-Class convertible and baby G-wagen, both due around the same time. We should see the convertible in the second half of 2028, Chamberlain says. Exact timing for both vehicles in the U.S. is still being determined as the products continue their development.

The other concern is the July deadline to review the USMCA trade agreement between the U.S., Canada, and Mexico given the contentious relationship the U.S. currently has with its neighbors. Automakers’ supply chains have been developed across the region as a whole.

Lot of tech packed into this 2027 Mercedes-Benz S-Class.

Tech Bro

A main area of development is technology. Mercedes has invested heavily to make new models software-defined vehicles that can be continuously upgraded with over-the-air updates. “The car, like wine, ages and gets better with time as you add features during the life of the vehicle,” Källenius says. They have AI-powered infotainment systems with the new MB.OS operating system that incorporates open AI and Google for ChatGTP and Gemini which have the advantage of knowing the car, he says.

AI can also make driving safer with advanced driver-assistance systems. Mercedes has Level 2++ capability where the car can navigate and drive from point-to-point but the driver must stay attentive with hands on the wheel. It also is certified for Level 3 (driver attention not required) in specific areas and circumstances and is testing Level 4 autonomous driving for future robotaxis. “SDV [software-defined vehicle] defined by AI is a game changer,” Källenius says.

Mercedes-Benz CEO Ola Källenius working the line in Tuscaloosa in his early days.

Manufacturing Still Paramount

Tech may be important, but good old-fashioned manufacturing is still where the metal meets the road. Källenius talked to us from the Tuscaloosa plant in Alabama that makes the GLE and GLS as well as the EQE and EQS and will be adding GLC production in the next couple years.

Mercedes-Benz CEO Ola Källenius pictured with his family when he worked in Tuscaloosa.

Tuscaloosa is a special place for the CEO. It is where he started his career in the ’90s when Mercedes decided to build a plant in the U.S. “Back in 1995, I convinced my then-girlfriend to marry me and we set up our family here, our two oldest sons were born here. So next to the business side of things, this is also home for me.”
The flexibility of the U.S. plant to make vehicles with gas engines, plug-in hybrids, and full EVs, is the model for all Mercedes manufacturing moving forward.