A Mercedes-Benz GLA compact SUV automobile, produced by Daimler AG,...

A Mercedes-Benz GLA compact SUV automobile, produced by Daimler AG, stands on display at the 65th Frankfurt International Motor Show in Frankfurt, Germany. (Sept. 11, 2013) Credit: Bloomberg

At Mercedes-Benz’s cavernous exhibition hall at the International Auto Show in Frankfurt this week, Diana Reuter wasn’t quite sure she was in the right place when she spotted a sleek, curvy crossover on display.

“This is a Mercedes?,” said the 32-year-old engineering company public relations manager while looking at the new GLA compact sport-utility vehicle. “It’s a clear break from the sedate, old man’s image and shows a new facet. It’s exciting.”

That’s much-needed buzz for a brand that had grown stale in recent years, causing it to drop to third in global luxury-car sales behind Volkswagen AG’s Audi in 2011. Under Dieter Zetsche, head of Mercedes and chief executive officer of parent Daimler AG, the brand is now mounting a comeback, fueled by one of the biggest makeovers in the auto industry. After bringing nine new models to market in the past 24 months, Mercedes plans another 13 all-new vehicles over the next eight years.

The effort to close the gap rests largely on a slate of sporty new compacts such as the GLA to woo younger customers, who have largely looked past Mercedes when considering a new car. Gorden Wagener, 45, who became the youngest chief designer of a major automaker when he took on the job in 2008, is critical to boosting the brand’s appeal.

The styling of the new models represent “a shift in paradigm,” Wagener said in an interview at the show. “We radically changed the design language to make it super clean and pure in line with our philosophy, which we call ‘sensual purity.’”

Top Target

Two years ago in Frankfurt, Zetsche vowed to retake the lead in luxury-car sales by the end of the decade after losing it in 2005 to Bayerische Motoren Werke AG. While the goal sounded like little more than empty rhetoric at the time, recent data show the plan is starting to gain traction.

“Mercedes took very long to catch its breath and now they can show what they prepared over the past three to four years,” said Christoph Stuermer, an analyst with IHS Automotive in Frankfurt. “The new vehicles are something to be proud of.”

Mercedes delivered 108,400 cars in August, a record for the month. The brand’s 19 percent increase outpaced BMW’s 16 percent rise and Audi’s 9.8 percent climb. The Daimler unit’s gains have been fueled chiefly by small cars such as the A-Class hatchback, van-like B-Class and new CLA four-door coupe. The GLA is the fourth in the line and at least one more is coming. That’s good news for dealers like Andreas Pawolka.

Sales Surge

“The new vehicles bring younger customers to our showroom,” said the Mercedes salesman from Dresden. “There are a lot more young people especially on the weekends when there’s no direct sales pressure and they can take a closer look.”

New styling and a broader lineup led to a 65 percent surge in compact-car sales to 227,700 vehicles through August. Daimler started the compact car push two years ago with a new generation B-Class followed by the launch of a completely re-designed A-Class hatchback last year. Half of the new A-Class buyers haven’t owned a Mercedes before, the company said. Zetsche said this week that Mercedes doesn’t have enough capacity to meet global demand for its cars.

“The previous generation A-Class didn’t excite young people,” said Steffen Buettner, who also sells Mercedes cars in Dresden. “The new A-Class works for 18-to-83 year-olds, men and women.”

Compact Push

In Frankfurt, Mercedes was keen to make a statement that its growth push is continuing. In addition to the GLA, which is geared at entry-level luxury buyers, Mercedes showed a plug-in hybrid variant of the top-of-the-line S-Class sedan and a pre-production version of the S-Class coupe, which looks sleeker thanks to slender headlights, narrow windows and a long hood.

The two-door S-Class goes on sale next year and is meant to cement Mercedes’s status at the top end of the market, where the brand has traditionally been at home.

The company also demonstrated its automated-driving technology — a hot area of development for the industry — with Zetsche riding on stage in a driverless S-Class sedan. About 3,000 people witnessed the stunt, crowding the stairs and balustrades of the elaborate three-story space.

Roaring Back

The push is likely to pay off next year. Mercedes is set to pass Audi to take the No. 2 position with sales of 1.58 million vehicles in 2014, compared with Audi’s 1.57 million, IHS Automotive estimates. Still, neither are seen reaching their goals of overtaking BMW by the end of the decade, according to the forecaster.

To maintain its momentum, Mercedes will need to show that its styling isn’t a one-time achievement but can stand the test of time, said Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany.

“Audi has good design, but they have repeated it over and over again,” said Bratzel. “A design needs to be advanced carefully and gradually with small changes. Otherwise, there’s a risk that you get fed up with it.”

At the Frankfurt show, the opening act for the new Mercedes models was Austrian musician Parov Stelar, who pounded out a fusion of jazz horns and electronic beats, symbolizing the 127-year-old brand’s own efforts to combine tradition and progress. There are signs that the target audience is getting the message.

“Mercedes used to have an old man’s image because only old men could afford the cars,” said Philipp Wenz, a 19-year-old from a Frankfurt suburb who wants to be a pilot. “The new models are miles away from the vehicles Mercedes offered 10 years ago.”

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