By Christiaan Hetzner
NEW YORK (Reuters) - German luxury carmaker Mercedes-Benz <DAIGn.DE> expects to sell a record number of vehicles this year in the United States, a crucial growth market now that demand for the brand in China has tailed off sharply.
A rejuvenated model range led by the next-generation S-Class flagship sedan and the new CLA compact four-door coupe, both of which debut around September, should lift volumes to an all time high in 2013, according to a Mercedes executive.
"This brand is absolutely on a roll here in the United States. The issues we might be dealing with in Europe with recession and with China really have absolutely no spillover here," said Stephen Cannon, president of Mercedes-Benz USA, in an interview on Tuesday prior to next week's auto show in Detroit.
His sales region leapfrogged Germany last year to become the brand's single biggest market. Mercedes meanwhile saw its sales in China drop nearly 19 percent in December, leaving annual volumes largely stagnant.
Barring policy risks from the upcoming debt ceiling standoff in Washington, Cannon expects the overall U.S. passenger car market to continually improve this year, rising to around 15-15.5 million this year from 14.5 million in 2012.
His optimism should relieve Daimler Chief Executive Dieter Zetsche, who is battling with significant structural problems particularly in China, where Volkswagen's <VOWG_p.DE> Audi brand outsold Mercedes two to one last year.
Sales of Mercedes-Benz cars in the United States jumped nearly 12 percent to over 274,000 vehicles last year. In doing so, the brand eclipsed its previous 2007 record by more than 20,000 cars despite an overall U.S. market that shrank by 2.5 million cars from 2007 as credit dried up during the recession.
Rival BMW <BMWG.DE> increased sales of its core BMW brand by 13.5 percent to about 281,500 last year, surpassing Mercedes thanks to the launch of the BMW X1 compact SUV - a segment which Mercedes will enter next year at the earliest.
A former U.S. Army Airborne Ranger and West Point grad, Cannon is looking to refresh or replace 19 models and launch 11 more in entirely new segments by the end of this decade.
"We think that there is substantial growth opportunity for Mercedes-Benz here in the United States over that 2020 time frame, so we're very bullish about the prospects but that's as specific as I'll get," he said, when asked about concrete sales targets.
"I will stack our product pipeline against any in the business," he said.
While this year will end on a strong note with the launch of the S-Class and CLA, Cannon said business will also be supported earlier on by the refreshed E-Class, his second best-selling model which soon will receive a mid-cycle facelift.
"We also could have sold 10,000 more MLs and GLs (SUVs) together had we gotten that extra production ... So in addition to the E-Class we've got huge pent-up demand for both the ML and GL-Class, which will help us get off to a good start in the first half of the year," he said.
Cannon added that he expected great things from the CLA that will be priced to poach customers from mass market brands selling fully-equipped compacts, rather than strictly going after premium rivals like BMW <BMWG.DE> and Audi.
"Why enter a volume segment and do niche volumes? It doesn't make sense ... We think this can be a really important vehicle for us - it's going to be our primary conquest vehicle," he said.
So far competitor offerings have met with muted demand. Sales of the BMW 1 Series compact fell about 13 percent to 7,700 cars last year, for example, while Audi sold even fewer A3s.
"We're not looking to take any 1 Series market share because they (BMW) don't have any ... But think about a high trim level Passat, think about an Acura <7267.T>, think about the near-luxury category where you can option up a car into the high 20s and low 30s (thousands of dollars)," Cannon said.
"If we can bring its entry point to within a few thousand dollars of those higher-trimmed mass market vehicles, we think there is significant volume potential for the CLA," he added.
Major U.S. model lines for the Mercedes brand contribute currently anywhere from 30,000 to 80,000 cars per year.
Key to the success of the CLA will be whether Gorden Wagener's design studio at Mercedes can pull off an athletic exterior dynamic enough to appeal to today's youth, following years of dull styling that failed to impress critics.
"We're now really starting to find our stride in design language that connects with those attributes," Cannon said.
In fact, the only thing that seemed to dampen the spirits of the Mercedes manager was the ongoing gridlock in Congress.
"They haven't dealt with the fiscal cliff, they just kicked it down the road. So it was a very dissatisfying compromise but one that at least calmed the financial markets," he said.
"That does impact the psychology of our customers."
(Reporting By Christiaan Hetzner; Editing by Matt Driskill and Stephen Coates)
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