Does This New Mercedes Model Scare U.S. Automakers?

At the Geneva Motor Show this month, Mercedes-Benz is scheduled to formally introduce its newest member of the family, dubbed the CLA. Companies introduce new models all the time, but the CLA has a significant amount riding on its success.

The CLA is being introduced as an addition to Mercedes’s existing A-Class, a compact model currently available in Europe, but one that will be making its way to the U.S. later this year. It will provide another entry-level option to prospective buyers, a market segment that has caused a dramatic lag for Mercedes behind key rivals such as BMW (BMW.DE) and Volkswagen (VLKAY.PK).

The CLA is intended to jolt the brand back to life, following a stock flat line over the past seven years under the leadership of Dieter Zetsche. During this time, Mercedes’s stock has grown only 6 percent, compared to BMW’s 87 percent growth and VW’s five-fold gains. With MB already positioning other executives to replace Zetsche, the CLA looks like his last opportunity to bring the company back

Significant under-performance in the compact- and small-car market, combined with missed opportunities in new markets — specifically China — have resulted in Mercedes’s stock flatline. The MB subsidiary Smart has been posting large losses, as VW’s Audi and BMW have managed to ensnare the small car market in Europe.

However, the European markets haven’t just been weak for Mercedes. American manufacturers General Motors (NYSE:GM) and Ford (NYSE:F) have also been seeing large difficulties in the region, and have subsequently rolled back their respective presences in the area. The new CLA and impending A-Class though, could pose a new threat to domestic manufacturers on American soil upon their arrival…