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The Globe and Mail

Canada’s love affair with luxury cars continues

Mercedes-Benz B-Class

Daimler AG

For most of the year, Mercedes-Benz Canada hasn't sold one of its most popular models. They simply haven't offered the B-Class wagon in the lineup. But despite this move, sales are up 10 per cent on the year, according to president and CEO Tim Reuss.

Here's something even more interesting: An all-new B-Class is slated for showrooms in November, and perhaps then Mercedes-Benz Canada will see its sales catch up to the luxury segment as a whole. That's right. Sales may be up 10.3 per cent for the Mercedes brand, but on the year, luxury sales are up 14.9 per cent, according to auto analyst Dennis DesRosiers of DesRosiers Automotive Consultants.

"The luxury segment is leading the sales parade in Canada this year, with every month out-selling the previous month," said DesRosiers in a note to clients, adding that during May, luxury sales were up as a group by 26.4 per cent.

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"The total market in May was up by 17.9 per cent and YTD (year-to-date) by 8.2 per cent, so luxury sales are significantly outpacing the total market," he said.

Reuss, for his part, says Mercedes Canada knew well in advance that it would not have a 2012 B-Class to sell. The B, with annual sales of about 3,000, represents around 10 per cent of the company's annual sales volume, so the company has been busy filling a big hole in the lineup.

But why has there been no B-Class for a year?

Canada, said Reuss, got lost in parent Daimler AG's bigger product development priorities. That is, the company decided to develop all-new B- and A-Class models for the high-volume European market before doing the same with an all-new B for Canada.

"If the U.S. had taken the B-Class, that would have been 15,000 or 18,000 [additional B-Class] units and it might have been a different outcome," said Reuss.

The U.S. sales arm of Mercedes-Benz had initially indicated it would sell the B, but later decided not to – leaving Canada far, far down the list of global priorities for Daimler AG.

To fill the gap, Mercedes Canada has been pushing hard to spark interest in ML and GLK SUVs. The C-Class sedan and coupe have also been selling in strong numbers, says Reuss.

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In the long run though, the B is a hugely important model in Canada. The old version had a starting price well below $30,000. As such, Mercedes in Canada had an entry model it could sell bundled with very attractive lease or finance payments. And given the fact that 75 per cent of the company's sales are financed or leased through Mercedes-Benz Canada's own captive finance arm, the lack of a B has been a challenge in terms of maintaining sales and attracting new buyers.

Nonetheless, through the end of May, the Mercedes brand was first among luxury brands in Canada – with a lead of nearly 2,000 units over arch-rival BMW (13,971 versus 12,051). If that trend continues, the arrival of a new B in November should solidify Mercedes as No. 1 in Canada among luxury brands.

What might BMW do to change that?

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