Do you see Mercedes making little Korean-esque clown cars just because they'll sell? No. They're protecting their brand image and that's exactly what Apple is going to do
Yay, car analogies!
Mercedes also make the A (and B...) class, an costly car, built cheaply and sold to people that want to buy their idea of a status symbol. They've had loads of bad press recently for poor quality cars. It wasn't long ago the E class was built for less money than the mondeo.
I don't live in the US, there's a lot less of the "omg it's a german car, they're all amazing and expensive and the best" over here.
You do not (often) get what you pay for.
ps. The 'korean clown car companies' are probably struggling for business more than mercedes - and do you drive a toyota or a nissan? You don't seem to know yourself