Mercedes Ups Tech and Luxury, Keeps S-Class on Top

Mercedes-Benz is digging in and putting more features into its redesigned flagship S-Class sedan. This is not just another ultra-luxury sedan. Mercedes believes the all new S-Class, packed with cutting edge technology, will set the tone for the entire line-up of Mercedes models.

More importantly, the changes are designed to keep the S-Class on top of the ultra-luxury sedan market—models sell between $80,000 and $130,000.

"This S-Class is a huge amount better [than the previous model] in all aspect, so we are very confident about the position of this vehicle regardless of the competitors," said Dieter Zetsche, Mercedes-Benz Cars CEO and Chairman of Daimler.

Zetsche was all smiles at the official unveiling of the S-Class in Hamburg, Germany. The event was held at the Airbus A380 delivery center. As part of the event, the new S-Class was driven across the runway before it rolled into a pavilion where Zetsche talked about the luxury cars new features.

Magic Body Control

Mercedes said new features in the S-Class are all part of what it calls the "intelligent drive system". The new technology includes software for adaptive cruise control, night vision and new seats that are supposed to mimic a hot-stone massage.

(Read More: Popular Small SUVs Fail Critical Crash Test)

One of the most interesting new features is known as Magic Body Control.

Here's how it works: Cameras in the windscreen of the grill scan the road while you are driving. If it senses a change coming up, the Magic Body Control adjusts the damping characteristics of the car so there is less jostling and a smoother ride when the S-Class reaches the stretch of road with a different surface.

Zetsche called it the next step in keeping drivers and occupants in the S-Class safe and comfortable. "There are active safety systems consist under the title of intelligent driving of about 20 assistant systems, which ultimately allow the vehicle to prevent accidents automatically."

(Read More: Repossessions Rise as Carmakers Rebound)

Mercedes-Benz new S-Class Series.
Source: Daimler
Mercedes-Benz new S-Class Series.

S-Class Facing Challengers

The S-Class is not the high volume, bread and butter model for Mercedes; that is the C-Class, which sells in far greater numbers. However, the S-Class is critical to Mercedes because it leads the high margin, and increasingly competitive ultra-luxury sedan market. Competitors like Audi, Lexus and Cadillac are all gearing up new or redesigned models to win over more buyers willing to spend at least $75,000 for a luxury car.

(Read More: New Study Finds China Manufacturing Costs Rising to US Level)

In particular, the segment has become very competitive in China, the world's largest auto market. The wealthy in China not only have the money to spend, they also want a full-size sedan that will keep them comfortable when their driver is shuttling them around Shanghai, Beijing or some other city in China.

Zetsche said the S-Class is primed to keep Mercedes in the lead in China's luxury auto market. "In China alone we have by far the largest market already and with the new S-class offering even more different body styles we definitely will maintain this position in China."

—By CNBC's Phil LeBeau. Follow him on Twitter @LeBeauCarNews

Questions? Comments?