When Mercedes-Benz launched its Metris commercial van late last year, the German automaker vowed to become a major player in the U.S. van industry.
After dominating global commercial van sales for two decades with its large Sprinter and Freightliner vans, Mercedes-Benz is no longer content to trail its U.S. competitors.
It’s taking an ambitious swipe at segment leader Ford, bringing the new, smaller Metris to the market and building a $500 million Charleston, S.C., plant to make the Sprinter.
The moves challenge Ford in small commercial vans, a segment the Dearborn, Mich., automaker created with the 2009 introduction of the Transit Connect.
The Transit Connect sold 52,221 units last year, more than three times as many as its nearest competitor, the Nissan NV200, according to Autodata Corp., an industry research firm. Ford’s larger Transit van led the full-size category with sales of 117,577.
Sales of small commercial vans jumped 61 percent last year — with total sales of 92,313 units — helped by pent-up demand unleashed by the improving economy.
The commercial van category does not include minivans, which are essentially passenger cars.
Although some worried that the expansion into new models might cannibalize sales, “the addition of compact vans has been largely a positive influence on van sales,” said Stephanie Brinley, an analyst at IHS Automotive.
Mercedes sees an opportunity for the Metris to bridge the space between smaller vans that don’t carry much cargo and larger vans that don’t fit in a garage.
“There’s a gap in that segment that hasn’t been filled in the U.S. in a long time,” said Jan ten Haaf, product manager for Mercedes-Benz Vans USA. “In some cases, the Sprinter is just too big, and when customers went for a smaller van — which we didn’t offer — it seemed they weren’t happy because it was too small.”
Unlike its 7-foot-tall Sprinter sibling, the smaller Mercedes-Benz Metris has a 6-foot, 5-inch clearance that allows it to fit easily in parking garages.
Moreover, the Metris is engineered for maximum capacity and payload on a smaller footprint — a combination that can haul cargo while navigating city streets.
“While it’s largely a commercial-oriented van, Mercedes is looking for that relationship to its passenger-car range,” Brinley said. “It gives the van an up-level, premium feel that makes it better suited to a shuttle for a luxury hotel than airport parking. The Metris doesn’t apologize for being a Mercedes.”
Although the Sprinter van is primarily used for cargo, the Metris is expected to split sales between its eight-passenger variant (starting at $32,500) and cargo version (starting at $28,950). Both have an additional $995 delivery fee.
The 2016 Mercedes-Benz Metris passenger van faces tough competition from Ford, which also sells a seven-passenger version of its small van, the Transit Connect Wagon. It starts at $24,825.
Inside the Metris, a four-cylinder engine built on the same architecture as the C-class premium sedan makes 208 horsepower and 258 pound-feet of torque. The van borrows other elements from Mercedes’ sedans, taking design cues from the gauge cluster, steering wheel and paddle shifters, as well as the headlights, grille and taillights — a strategy that reduces development costs and ensures continuity throughout the lineup.
The Metris name is a nod to the congested metropolitan areas where the vehicle’s engine is built to thrive.
Increased economic activity and business spending have kept Ford’s vans selling quickly in spite of low fuel prices, said Erich Merkle, U.S. sales analyst at Ford. The automaker’s combined commercial van sales rose 32 percent last year for its best performance since 1978.
“The different van sizes help to better meet customers’ specific needs,” Merkle said. “It has been a very effective strategy.”
General Motors is watching this market closely, said Mark Reuss, the Detroit automaker’s global product chief.
With fuel prices so low, fleet operators and small businesses don’t have a huge incentive to replace their current vehicles, Reuss said. GM thinks its current, larger van offerings can satisfy demand for now, he said.
But it has hedged its bets. GM offers a small van, the City Express. It’s a rebadged NV200 procured from Nissan.
Each manufacturer is targeting customers of smaller vans, such as FedEx, Google and Amazon, that deliver goods within urban areas. Those companies are looking for a mix of fuel economy and the latest in safety and technology features.
“The evolution of commercial vehicles is very close to what we see with automobiles,” said Dan McMackin, a spokesman for UPS. “In the past, it was not uncommon for us to keep a vehicle in the fleet for as many as 30 years or even a little longer. Now, on average, the length of service might be 20 years.”
Mercedes declined to name its largest customers because of licensing agreements but revealed that they include a large shipping company, an online retailer and a rental car company. Mercedes also expects to do significant business with hotel shuttles and limousine companies. It picked an unusual venue for spreading the word among small-business owners: a television ad campaign that kicked off during Week 1 of the. National Football League season.
However, early Metris sales have been slow. Only 1,368 units sold during the last three months of 2015.
This year hasn’t started out much better. Mercedes sold 1,377 Metris vans in first quarter, Autodata reported. Ford, by comparison, sold 10,068 Transit Connects in January. Nissan sold 5,352 NV200s.
IHS Automotive forecasts annual Metris sales of between 10,000 and 13,000 — just 3 percent of U.S. commercial van sales — as demand for vans is projected to decline slightly this year and next.
The Metris launched during a record year for Mercedes-Benz commercial vans, with sales up 9 percent to about 321,000 vehicles worldwide.
Mercedes plans to ride that momentum into 2016 with the next-generation Sprinter van. The Sprinter, sold in the U.S. under the Mercedes-Benz brand since 2010, will get a new $500 million home this year when Mercedes opens its Charleston, S.C., plant. The Metris will continue to be built in Vitoria, Spain, and reassembled in Ladson, S.C.
The Sprinter had its best performance in the U.S. last year, with sales up 19 percent to 25,850 units, outpacing the large van segment’s 10 percent growth. The investment in the plant will allow Mercedes to avoid the 25 percent federal tariff on imports of commercial vans and pickup trucks. It will also slash delivery time in the U.S., the Sprinter’s second-largest market after Germany.
The strength of the U.S. economy and the mood of consumers will determine whether the three-pointed Mercedes star helps or hurts sales of the German automaker’s vans.
Customers’ attitudes toward the upscale hood ornament continue to serve as an economic barometer, Bernie Glaser, vice president of Mercedes-Benz Vans USA, said during a test drive of the Metris in Dunton Hot Springs, Colo., last summer.
Some small businesses remove the emblem, lest their customers fear being overcharged, while others, including upscale hotel customers, buy Mercedes vans for the badge.
“Some of our hotel customers for the Sprinter like to associate their brand with a Mercedes in the driveway,” Glaser said. “It adds a flair of luxury.”