My experience with several RAC companies is that they will give a free upgrade of a class or two if they are out of your reserved class, but it doesn't surprise me that the Mercedes falls outside that realm. Once on an economy res at Dollar, the agent tried to upsell me to a compact (Corolla), when I declined he admitted that they didn't have any economy and I got the Corolla at no additional charge. I have had several other similar upgrades, but generally without the upsell pitch.

I was at Avis in DEN once in the early summer, they had a car shortage but a huge surplus of SUVs. The agent apologetically asked if I would take a fully loaded Yukon on my intermediate reservation (I did). From the way he was asking, it seemed that a lot of customers weren't keen on SUV upgrades.