panason1c
Senior Member
- Joined
- Apr 19, 2004
- Messages
- 1,927
- Reaction score
- 9
- Age
- 70
- Location
- Somerset, UK
- Your Mercedes
- Mercedes ML270CDI, VW Polo 1.9tdi, BMW K1200RS
Mercedes, Quality Dropping, Loses Market Share to BMW, Lexus
Feb. 9 (Bloomberg) -- Dominik Wendel got fed up with his Mercedes SLK 350 sports car. First, the convertible roof leaked. Then it wouldn't open properly, sending him back to the garage at least five times. The car also whistled on the autobahn.
I was not very satisfied with the quality,'' said Wendel, 40, a lawyer with the Frankfurt-based firm Noerr Stiefenhofer Lutz. Last year he bought a Lexus SC 430 from Toyota Motor Corp.
Mercedes has plunged in customer satisfaction surveys in Germany and the U.S., partly because of technical flaws. The world's largest luxury carmaker has lost sales to Bayerische Motoren Werke AG and Toyota, and profit is falling. Tomorrow, Mercedes's parent, DaimlerChrysler AG, probably will say fourth- quarter net income more than halved to 634 million euros ($821 million), according to 14 analysts surveyed by Bloomberg.
Eckhard Cordes, who took over in October as chief executive officer of Stuttgart, Germany-based Mercedes Car Group, has pledged to reverse the slide. A 29-year DaimlerChrysler veteran, Cordes, 54, says he plans to cut costs to counter the impact of the U.S. dollar's 16 percent decline against the euro in the past two years. Mercedes already negotiated 500 million euros in savings with German workers in 2004. Cordes also says he'll make sure cars produced now meet the company's quality standards.
Each customer lost is very difficult to win back,'' says Michael Schneider, a fund manager at Frankfurt-based Deka Investment GmbH, which oversees about $144 billion in assets and owns DaimlerChrysler shares. ``It will take time to improve their image.''
Electronic Failures
DaimlerChrysler shares fell 4.7 percent last year, compared with a 15 percent stock gain by Toyota, which is based in central Japan's Aichi prefecture. They closed at 36.16 euros yesterday.
Mercedes-Benz, which makes the S-Class luxury sedan and the A- Class compact hatchback, ranked 29th out of 37 brands in a June reliability study of 3-year-old cars by Westlake Village, California-based J.D. Power & Associates. It logged 327 defects per 100 vehicles, worse than the U.S. industry average. Four years earlier, Mercedes scored seventh out of 38 brands, with 308 defects per 100 vehicles.
At home, Mercedes-Benz had the most electronic failures of all brands sold in Germany, Michelstadt, Germany-based automotive consulting firm 3hm Automotive said in July. It was also last among 33 brands in a March study gauging customer satisfaction by the ADAC German Automobile Club. Car owners were most satisfied with Toyota. Munich-based BMW ranked ninth.
Quality deteriorated at Mercedes, known for its star symbol, as DaimlerChrysler focused on reorganizing Chrysler Group in the U.S. and expanding in Asia with its unprofitable affiliate, Mitsubishi Motors Corp., says Michael Raab, an analyst at Sal Oppenheim in Frankfurt.
Cordes, a bespectacled German who reports to DaimlerChrysler CEO Juergen Schrempp, 60, has made improving Mercedes's quality his priority.
``Only satisfied customers can keep alive the future of a brand,'' Cordes told journalists in January at the North American International Auto Show in Detroit. ``I will hold myself accountable for this.''
Defects have been found in parts ranging from batteries to emergency lights, which flashed when nothing was wrong, says Johannes Reifenrath, a Mercedes spokesman. Sometimes customers didn't understand how convertible roofs and other electronic devices worked, making them suspect a malfunction, he says.
Cordes said in January that Mercedes is working to make sure new cars meet its own standards even if it costs ``some money.'' The company also aims to correct defects on older models when they're serviced so that the resale value isn't affected.
Falling Profits
Based on the internal audits, quality is rising by 10 percent to 20 percent annually, Thomas Weber, a DaimlerChrysler management board member responsible for research, said in November. Cordes wasn't available for an interview ahead of the full-year results, said Thomas Froehlich, a spokesman.
The challenges at Mercedes aren't just technical. Cordes also needs to reduce costs to compete and to offset the falling dollar. Mercedes sells some of its German-built cars in the U.S., and revenue is reduced when dollars are converted into euros.
Net income per 1,000 DaimlerChrysler employees was 2.56 million euros ($3.32 million) in the third quarter, compared with 1.6 billion yen ($15.4 million) in the same period for Toyota, according to Bloomberg data.
Schrempp's Successor?
Mercedes Car Group's 2004 operating profit probably fell by a third to 2.04 billion euros, according to the Bloomberg survey of 14 analysts. Earnings have been hurt by Mercedes's Smart microcar unit, whose losses reached about 500 million euros last year, according to Fredrik Westin, an analyst at Dusseldorf, Germany- based WestLB.
Mercedes's German workers agreed in July to help the company save 500 million euros annually beginning in 2006 by working longer hours and accepting lower wage increases. To pare costs further, Cordes will have to negotiate lower prices from suppliers, says Adam Jonas, an analyst at Morgan Stanley in London.
If Cordes succeeds in improving sales growth at Mercedes, he may become the lead candidate to replace Schrempp after the CEO retires in 2008, Jonas and Westin say. Dieter Zetsche, who runs Chrysler, also may be a contender for the job.
``Mercedes is essential to the image of the German car industry and is an icon for the luxury-car industry,'' Jonas says. ``If Cordes wants to take on a greater leadership role, he'll need to get Mercedes' profit on an upward trajectory.''
Test-Driving Trucks
Cordes got the job after another candidate, Wolfgang Bernhard, clashed with DaimlerChrysler's board over the changes needed at Mercedes and refused to back Schrempp's plan to bail out Mitsubishi Motors, people familiar with the matter said. Cordes replaced Juergen Hubbert, who retires this year from DaimlerChrysler.
Until September 2004, Cordes, who holds a doctorate in business from the University of Hamburg, was head of DaimlerChrysler's truck division, where he eliminated 16,000 jobs to stop losses. He even earned a driver's license for commercial vehicles in order to test-drive the trucks himself, according to Marc Binder, a DaimlerChrysler spokesman.
The challenge at Mercedes may be more daunting. The truck division, based in DaimlerChrysler's Stuttgart headquarters, was helped by a global surge in demand. No such boom is expected in luxury cars and the competition is tougher, WestLB's Westin says.
BMW's X3 SUV
Mercedes, founded in a 1924 alliance between Gottlieb Daimler and Karl Benz, chose the star as its symbol from the beginning. The durability of the cars made Mercedes the world's most valuable auto brand from 1999 to 2003, according to New York-based Interbrand Corp., a brand consulting firm, and BusinessWeek magazine. Brand value is the net present value of the earnings that a brand is expected to generate and secure in the future.
Toyota, the world's biggest carmaker by market value, last year overtook Mercedes in that ranking.
Last week, Toyota said profit in the quarter ended in December rose 3.5 percent as demand gained for models such as the Corolla compact car and as costs fell. Toyota President Fujio Cho, who says he aims to surpass General Motors Corp. as the largest carmaker by unit sales, raised his forecast for full-year vehicle sales.
Meanwhile, BMW is closing the gap with Mercedes for the title of the biggest maker of luxury cars. Sales of the BMW brand rose 10 percent to 1.02 million vehicles, boosted by new models including the all-new X3 sport utility vehicle and the 1-Series compact car. Mercedes-Benz brand sales fell 3.1 percent to 1.06 million units.
For the first time ever, BMW outsold Mercedes when including the two carmakers' other brands.
New M-Class
BMW sold 1.21 million units, including its Mini and Rolls- Royce vehicles. Sales at Mercedes, with its Smart microcar and Maybach brands, fell 0.8 percent to 1.2 million units last year. Mercedes sales in the U.S. rose 1.3 percent, slower than the market's advance of 1.4 percent and BMW's 8 percent growth.
Even Mercedes's Chrysler unit, which DaimlerChrysler bought in 1998, has gained momentum. The Auburn Hills, Michigan-based division is expected to report a 2004 operating profit of 1.43 billion euros, following a loss a year earlier.
That's changing the balance within DaimlerChrysler, which also owns 32.9 percent of European Aeronautic, Defense & Space Co., the parent of planemaker Airbus SAS. Mercedes probably accounted for a third of DaimlerChrysler's operating profit last year, down from more than half in 2003.
New Models
In an effort to win back customers, Mercedes this year will introduce a new S-Class sedan, the company's flagship model; a new M-Class sport-utility vehicle and the all-new R-Class, a cross between a station wagon and an SUV.
Another new Mercedes model, the CLS 350, is aimed at BMW's 630i. Both are six-cylinder coupes that went on sale in 2004. The Mercedes model has a 3.5-liter engine that can accelerate from 0 to 100 kilometers (62 miles) per hour in 6.6 seconds. The BMW's 3- liter engine is slower at 6.9 seconds.
Some long-time Mercedes customers still have confidence in the brand. Gregorios Sachinidis, a taxi driver in the Greek city of Thessaloniki, and his 1976 Mercedes-Benz 240D hold the record for the most miles logged by a Mercedes passenger model, with 2.8 million miles. He donated his car to the company's museum in Stuttgart in return for a new C200 model.
Sachinidis says. ``I'm very satisfied with my new model and expect it to last longer than my previous car, of course.''
Feb. 9 (Bloomberg) -- Dominik Wendel got fed up with his Mercedes SLK 350 sports car. First, the convertible roof leaked. Then it wouldn't open properly, sending him back to the garage at least five times. The car also whistled on the autobahn.
I was not very satisfied with the quality,'' said Wendel, 40, a lawyer with the Frankfurt-based firm Noerr Stiefenhofer Lutz. Last year he bought a Lexus SC 430 from Toyota Motor Corp.
Mercedes has plunged in customer satisfaction surveys in Germany and the U.S., partly because of technical flaws. The world's largest luxury carmaker has lost sales to Bayerische Motoren Werke AG and Toyota, and profit is falling. Tomorrow, Mercedes's parent, DaimlerChrysler AG, probably will say fourth- quarter net income more than halved to 634 million euros ($821 million), according to 14 analysts surveyed by Bloomberg.
Eckhard Cordes, who took over in October as chief executive officer of Stuttgart, Germany-based Mercedes Car Group, has pledged to reverse the slide. A 29-year DaimlerChrysler veteran, Cordes, 54, says he plans to cut costs to counter the impact of the U.S. dollar's 16 percent decline against the euro in the past two years. Mercedes already negotiated 500 million euros in savings with German workers in 2004. Cordes also says he'll make sure cars produced now meet the company's quality standards.
Each customer lost is very difficult to win back,'' says Michael Schneider, a fund manager at Frankfurt-based Deka Investment GmbH, which oversees about $144 billion in assets and owns DaimlerChrysler shares. ``It will take time to improve their image.''
Electronic Failures
DaimlerChrysler shares fell 4.7 percent last year, compared with a 15 percent stock gain by Toyota, which is based in central Japan's Aichi prefecture. They closed at 36.16 euros yesterday.
Mercedes-Benz, which makes the S-Class luxury sedan and the A- Class compact hatchback, ranked 29th out of 37 brands in a June reliability study of 3-year-old cars by Westlake Village, California-based J.D. Power & Associates. It logged 327 defects per 100 vehicles, worse than the U.S. industry average. Four years earlier, Mercedes scored seventh out of 38 brands, with 308 defects per 100 vehicles.
At home, Mercedes-Benz had the most electronic failures of all brands sold in Germany, Michelstadt, Germany-based automotive consulting firm 3hm Automotive said in July. It was also last among 33 brands in a March study gauging customer satisfaction by the ADAC German Automobile Club. Car owners were most satisfied with Toyota. Munich-based BMW ranked ninth.
Quality deteriorated at Mercedes, known for its star symbol, as DaimlerChrysler focused on reorganizing Chrysler Group in the U.S. and expanding in Asia with its unprofitable affiliate, Mitsubishi Motors Corp., says Michael Raab, an analyst at Sal Oppenheim in Frankfurt.
Cordes, a bespectacled German who reports to DaimlerChrysler CEO Juergen Schrempp, 60, has made improving Mercedes's quality his priority.
``Only satisfied customers can keep alive the future of a brand,'' Cordes told journalists in January at the North American International Auto Show in Detroit. ``I will hold myself accountable for this.''
Defects have been found in parts ranging from batteries to emergency lights, which flashed when nothing was wrong, says Johannes Reifenrath, a Mercedes spokesman. Sometimes customers didn't understand how convertible roofs and other electronic devices worked, making them suspect a malfunction, he says.
Cordes said in January that Mercedes is working to make sure new cars meet its own standards even if it costs ``some money.'' The company also aims to correct defects on older models when they're serviced so that the resale value isn't affected.
Falling Profits
Based on the internal audits, quality is rising by 10 percent to 20 percent annually, Thomas Weber, a DaimlerChrysler management board member responsible for research, said in November. Cordes wasn't available for an interview ahead of the full-year results, said Thomas Froehlich, a spokesman.
The challenges at Mercedes aren't just technical. Cordes also needs to reduce costs to compete and to offset the falling dollar. Mercedes sells some of its German-built cars in the U.S., and revenue is reduced when dollars are converted into euros.
Net income per 1,000 DaimlerChrysler employees was 2.56 million euros ($3.32 million) in the third quarter, compared with 1.6 billion yen ($15.4 million) in the same period for Toyota, according to Bloomberg data.
Schrempp's Successor?
Mercedes Car Group's 2004 operating profit probably fell by a third to 2.04 billion euros, according to the Bloomberg survey of 14 analysts. Earnings have been hurt by Mercedes's Smart microcar unit, whose losses reached about 500 million euros last year, according to Fredrik Westin, an analyst at Dusseldorf, Germany- based WestLB.
Mercedes's German workers agreed in July to help the company save 500 million euros annually beginning in 2006 by working longer hours and accepting lower wage increases. To pare costs further, Cordes will have to negotiate lower prices from suppliers, says Adam Jonas, an analyst at Morgan Stanley in London.
If Cordes succeeds in improving sales growth at Mercedes, he may become the lead candidate to replace Schrempp after the CEO retires in 2008, Jonas and Westin say. Dieter Zetsche, who runs Chrysler, also may be a contender for the job.
``Mercedes is essential to the image of the German car industry and is an icon for the luxury-car industry,'' Jonas says. ``If Cordes wants to take on a greater leadership role, he'll need to get Mercedes' profit on an upward trajectory.''
Test-Driving Trucks
Cordes got the job after another candidate, Wolfgang Bernhard, clashed with DaimlerChrysler's board over the changes needed at Mercedes and refused to back Schrempp's plan to bail out Mitsubishi Motors, people familiar with the matter said. Cordes replaced Juergen Hubbert, who retires this year from DaimlerChrysler.
Until September 2004, Cordes, who holds a doctorate in business from the University of Hamburg, was head of DaimlerChrysler's truck division, where he eliminated 16,000 jobs to stop losses. He even earned a driver's license for commercial vehicles in order to test-drive the trucks himself, according to Marc Binder, a DaimlerChrysler spokesman.
The challenge at Mercedes may be more daunting. The truck division, based in DaimlerChrysler's Stuttgart headquarters, was helped by a global surge in demand. No such boom is expected in luxury cars and the competition is tougher, WestLB's Westin says.
BMW's X3 SUV
Mercedes, founded in a 1924 alliance between Gottlieb Daimler and Karl Benz, chose the star as its symbol from the beginning. The durability of the cars made Mercedes the world's most valuable auto brand from 1999 to 2003, according to New York-based Interbrand Corp., a brand consulting firm, and BusinessWeek magazine. Brand value is the net present value of the earnings that a brand is expected to generate and secure in the future.
Toyota, the world's biggest carmaker by market value, last year overtook Mercedes in that ranking.
Last week, Toyota said profit in the quarter ended in December rose 3.5 percent as demand gained for models such as the Corolla compact car and as costs fell. Toyota President Fujio Cho, who says he aims to surpass General Motors Corp. as the largest carmaker by unit sales, raised his forecast for full-year vehicle sales.
Meanwhile, BMW is closing the gap with Mercedes for the title of the biggest maker of luxury cars. Sales of the BMW brand rose 10 percent to 1.02 million vehicles, boosted by new models including the all-new X3 sport utility vehicle and the 1-Series compact car. Mercedes-Benz brand sales fell 3.1 percent to 1.06 million units.
For the first time ever, BMW outsold Mercedes when including the two carmakers' other brands.
New M-Class
BMW sold 1.21 million units, including its Mini and Rolls- Royce vehicles. Sales at Mercedes, with its Smart microcar and Maybach brands, fell 0.8 percent to 1.2 million units last year. Mercedes sales in the U.S. rose 1.3 percent, slower than the market's advance of 1.4 percent and BMW's 8 percent growth.
Even Mercedes's Chrysler unit, which DaimlerChrysler bought in 1998, has gained momentum. The Auburn Hills, Michigan-based division is expected to report a 2004 operating profit of 1.43 billion euros, following a loss a year earlier.
That's changing the balance within DaimlerChrysler, which also owns 32.9 percent of European Aeronautic, Defense & Space Co., the parent of planemaker Airbus SAS. Mercedes probably accounted for a third of DaimlerChrysler's operating profit last year, down from more than half in 2003.
New Models
In an effort to win back customers, Mercedes this year will introduce a new S-Class sedan, the company's flagship model; a new M-Class sport-utility vehicle and the all-new R-Class, a cross between a station wagon and an SUV.
Another new Mercedes model, the CLS 350, is aimed at BMW's 630i. Both are six-cylinder coupes that went on sale in 2004. The Mercedes model has a 3.5-liter engine that can accelerate from 0 to 100 kilometers (62 miles) per hour in 6.6 seconds. The BMW's 3- liter engine is slower at 6.9 seconds.
Some long-time Mercedes customers still have confidence in the brand. Gregorios Sachinidis, a taxi driver in the Greek city of Thessaloniki, and his 1976 Mercedes-Benz 240D hold the record for the most miles logged by a Mercedes passenger model, with 2.8 million miles. He donated his car to the company's museum in Stuttgart in return for a new C200 model.
Sachinidis says. ``I'm very satisfied with my new model and expect it to last longer than my previous car, of course.''
