Automobile Magazine - Mercedes-Benz and BMW Need Mass Market Partners

[Merc1]

It's not just the faltering U.S. carmakers and their various affiliates that need to seek partners nowadays. Even the reigning kings of German automotive arrogance, Mercedes-Benz and BMW, are finding it tough to go it alone.

Compared with rivals like Audi, which is part of the six-million-unit-per-year Volkswagen Group, and Lexus, an arm of the Toyota juggernaut, the two German premium marques may be long on prestige but they're short on volume, stuck below the two-million-unit waterline. And right now, both BMW and Mercedes-Benz are experiencing a troubling trend toward smaller, lower-profit models like the Mini and the 1-series, in BMW's case, or Benz's B-class and C-class. At the same time, there is a need to invest heavily in technologies such as higher-output batteries, hybrid powertrains, electric motors, dual-clutch transmissions, lighter architectures, and new safety concepts. In order to amortize those costs, the two German brands need to hook up with a high-volume, mass-market player to dramatically increase their economies of scale.

Both will have to get over recent bad experiences. The Bavarians got burned when they acquired, nurtured, and then disposed of Britain's Rover Group. And Daimler is still suffering from its recently ended marriage to Chrysler, a toxic ex-spouse that is still inflicting financial pain. But even if those scars haven't fully healed, both BMW and Daimler still need a volume partner to ensure long-term financial health.


Full Story: Automobile Magazine - Mercedes-Benz and BMW Need Mass Market Partners


M

 

[Human]

It's not just the faltering U.S. carmakers and their various affiliates that need to seek partners nowadays. Even the reigning kings of German automotive arrogance, Mercedes-Benz and BMW, are finding it tough to go it alone.

Compared with rivals like Audi, which is part of the six-million-unit-per-year Volkswagen Group, and Lexus, an arm of the Toyota juggernaut, the two German premium marques may be long on prestige but they're short on volume, stuck below the two-million-unit waterline. And right now, both BMW and Mercedes-Benz are experiencing a troubling trend toward smaller, lower-profit models like the Mini and the 1-series, in BMW's case, or Benz's B-class and C-class. At the same time, there is a need to invest heavily in technologies such as higher-output batteries, hybrid powertrains, electric motors, dual-clutch transmissions, lighter architectures, and new safety concepts. In order to amortize those costs, the two German brands need to hook up with a high-volume, mass-market player to dramatically increase their economies of scale.

Both will have to get over recent bad experiences. The Bavarians got burned when they acquired, nurtured, and then disposed of Britain's Rover Group. And Daimler is still suffering from its recently ended marriage to Chrysler, a toxic ex-spouse that is still inflicting financial pain. But even if those scars haven't fully healed, both BMW and Daimler still need a volume partner to ensure long-term financial health.


Full Story: Automobile Magazine - Mercedes-Benz and BMW Need Mass Market Partners


M

I cannot talk for Daimler, that said...BMW Group is THE AUTOMOBILE MANUFACTURER with THE BEST SUSTAINABILITY WORLDWIDE. They have very good planning for future products and exploiting new markets and also keeping their sustainability record. Toyota and VW are suffering the most in these hard times.... I think this will make for an intgeresting discussion....

 

[coolraoul]

Actually, unless I'm mistaken, Daimler makes more money out of every sold vehicle than BMW. However, BMW has more cash reserve than Daimler (Chrysler took its fair share of it...).

But BMW has nothing decisive in store for the coming months, and will have to wait till middle of next year with more or less the same line-up.

Whereas Mercedes just released the new E and E-Coupe, usually carrying huge profits, and facelifted his very profitable S (with the CL coming).

BMW's bread and butter 3er is old now and will begin to fade, which will almost absorb the benefits of the new mid-2010 5er.

Basically, the fresh air will only come with the new 3er for BMW (I don't know how profitable the X3 and X1 will be).

And finally, Mercedes's partnerings in the electric areas (Li-Ion partnering with Conti, 90% owned joint-venture with Evonik for battery production, 10% share in Tesla) and advance in the fuel-cell area (Fuel-Cell B-Class for sale next year) could give them an edge for the future.

Furthermore, the new ideas of Daimler (especially the car-rent in cooperation with big cities, or the manufacturing of batteries for other carmakers) could bring welcomed money.

I think Daimler has better cards than BMW, even if it might look otherwise at the moment.


Concerning Toyota... they sit on so much money they could buy VW, Daimler and BMW altogether if they wanted to. Unless the crisis lasts 150 years and Toyota doesn't sell one single car during all that time, they won't have anything to be really afraid of.

And VW is pretty much one of the very few not suffering that much from the crisis. Audi si doing way better than Merc and BMW, VW sells like hell, so nothing really frightening for them.

Actually, it's more the luxury carmakers who are threatened this time around...

But I'm no expert, so I stand to be corrected if i'm not right!

 

[Centurion]

I cannot talk for Daimler, that said...BMW Group is THE AUTOMOBILE MANUFACTURER with THE BEST SUSTAINABILITY WORLDWIDE. They have very good planning for future products and exploiting new markets and also keeping their sustainability record. Toyota and VW are suffering the most in these hard times.... I think this will make for an intgeresting discussion....

Take it easy there with caps lock button.

 

[HighestOfHigh]

In order to amortize those costs, the two German brands need to hook up with a high-volume, mass-market player to dramatically increase their economies of scale.

Speaking of high-volume, it would be nice to see the two have a "lower brand". Like Lexus to Toyota. Mercedes has smart and BMW mini, but there not as big as Nissan or Toyota. I would really like to see Mercedes-Benz either extend smart to maybe 3 sedans with hybrid, diesel and gas sources that are exceptionable quality. Maybe something to go against Toyota's Camry and Honda's Civic. Yes, it would take a lot of money to invest in there brands, but the high volume sales could be beneficial in the long run.

 

[GBOY]

They could even use the old platforms ... redesign the previous generation W203 and W211 Call them Daimler, Smart or Whatever ...

 

[HighestOfHigh]

They could even use the old platforms ... redesign the previous generation W203 and W211 Call them Daimler, Smart or Whatever ...

Lol...Well that is one way they could save some money. They could take out the leather, trim some of the wood and de-chrome some of the rims.

 

[GBOY]

Call me bias but I'll take a manufacturer refurbished Mercedes/BMW over a new Toyota or Honda any day!

 

[HighestOfHigh]

Actually, it wouldn't be beneficial to do that. The price of parts would be to high compared with Camry and Accord.

 

[braaf]

I always wonder what would have happened if BMW had actually bought a brand like Opel. But then again does Opel move numbers like BMW does.

 

[Merc1]

I know they both hate it after being burned by trying to attach themselves to mass-market makers (Rover, Chrysler), but I guess they'll have to do something (again). This is what EnI has been saying all along.


The best solution right now is just cooperation where they can without compromising either, IMO.


M

 

[coolraoul]

Problem is... how do you want to achieve scale savings if every single piece that one buys costs double what the other pays for it?

It's only possible if you spend 20 years carefully developping a platform system where both interests are taken into account, and if the two brands are completely integrated and participate in the development of the car, like Audi and VW do.

But BMW and Mercedes don't have 20 years at hand, and I'm not sure a platform sharing would be a veru good idea for them... as it surely would mean switching to FWD for a majority of their cars!

A premium carmaker can't really cooperate with a generalist. Only try to sell/share motors and some components, but not really cooperate.

This is what Rover and Chrysler proved to BMW and Mercedes-Benz.

Scale savings can be achieved if you compete at the same level. Not if one is premium and the other isn't. And that is their problem right now.

 

[HighestOfHigh]

I think they need to start from scratch or what with they already have. Smart could really be Mercedes-Benz's lower price brand. Like I said before they could extend the model range. The hardest thing to do would be for them to set up dealerships expecially in the US, considering most Smart cars are sold at Benz dealerships.

I would love to see a Smart car take on a Toyota Camry, Honda Accord or Nissan Altima. Or BMW extend Mini. Seems like BMW and Mercedes keep thinking they can produce cheaper cars under their brand, but I don't think that is the best idea.