Reasons behind MB's downfall

[Monteverdi]

Mercedes Benz used to be far ahead of every luxury car maker. But then Jurgen Schremp times came and bad quality started to be an issue. Also they had a pretty costy and not rewarding alliance with Chrysler. But why Audi and BMW leaped them in terms of development? Why MB is always behind BMW and Audi in almost every single comparison? Discuss.

 

[Wunderkind]

The Daimler Chrysler combination was costly while it lasted and Daimler Chrysler had to cut back on many programs in order to prop up the cash-haemorrhaging Chrysler business when the American obssesion with the gas guzzling SUV slowed down. Chrysler's sales at the time was heavily reliant on the SUV business and when that market tanked, Chrysler was in real trouble. They basically had nothing else left to sell. Chrysler had no small cars and the medium sized cars were a joke until the 300C arrived.

Mercedes Benz had to cut back on a few programs and re-align it's resources to cope with the needs of Chrysler in mind. Everything was unscrambled when Daimler finally managed to jettison the Chrysler business to a private equity firm. Unscrambling the scrambled egg was time consuming and Mercedes engineers did eventually managed to refocus its efforts on making good products rather than fighting fires. Maybach was also a distraction. Internally the Mercedes product planners also got their planning wrong and some products did not sell well. The A and B Class are prime examples. It is really the inability of the A and B class that hurt Mercedes vis-a-vis BMW and VAG.

It was truly a lost decade for Mercedes Benz. BMW managed to undo the Rover acquisition and turned Rolls Royce and MINI around into success stories. The 3-series now has an unassailable lead over the C Class while the 5 series is pulling away from the E Class globally.Audi also gained significant market share from Mercedes in the last ten years. The areas where Mercedes has fallen behind (or where BMW and Audi have caught up) since the Schrempp days is quality, engine and drivetrain, and niche models - Mercedes was slow to bring out niche models and many of them didn't do well.

One consolation is that Mercedes Benz might be part of the Ford Motor Company if it did not merge with Chrysler.

Typed on my iPhone, sorry if the above is somewhat incoherent.

 

[Monteverdi]

One consolation is that Mercedes Benz might be part of the Ford Motor Company if it did not merge with Chrysler.

Could you elaborate?

 

[Merc1]

Much ado about nothing IMO. Comparison tests don't signal a downfall at Mercedes-Benz. Mercedes is concentrating on quality and giving the customers what they want, hence rising sales all over the globe. You're asking about downfall regarding comparison testing? That is sill as hell to me. Mercedes, outside of the S-Class and the SL never won comparison testing with any regularity. Why is that so hard for people on this board to grasp? This is very, very old news. The 3-Series has always outsold the C-Class, again very old news. Uh the 3 has a coupe, wagon, convertible and a sedan to the the C's sedan, wagon and just now a coupe.

Mercedes' quality in just about survey you wanna google or pull from anywhere, is higher than Audi's or BMW's. At least in the U.S. they are leaving Audi and BMW in the dust when it comes to quality.

Yes it took Mercedes a good while to recover from the DCX marriage and the whole cheapness of the previous generation models, but Mercedes is on the mend, has been for several years now.

If you're going to say that Mercedes is having a downfall because they aren't winning magazine comparison testing, you have haven't been paying attention the last 20+ years and you're clearly out of the loop on as to what Mercedes has managed to accomplish in the last 5-7 years.

The only area where Mercedes has "fallen off" is in styling, and even that is not a shared opinion since they're selling everything they make, except the R-Class.

Mercedes will catchup in development with just one model, the upcoming S-Class. It will once again move the industry forward.


M

 

[speed_kills]

In 4 years I predict a similar thread
"Reasons behind BMW downfall"

 

[Centurion]

Although the Chrysler affair left a huge financial hole in the wallet Mercedes has done an admirable job in remaining relevant and without much loss. Their higher end range is doing fantastic and the appeal of the SLS, CLS and other cars have lifted Mercedes to it's top glory. The lower range segments is where they have significantly lost out. They failed to anticipate that rising fuel prices and stricter emission regulations would push the appeal for smaller luxury cars. Hence they have missed out on the high profits BMW and Audi have scoped using models like the 1er, X3, Q3 and A1.

Mercedes did get the idea with the Smart brand but the execution and product offering were simply not appealing nor viable for most people. Maybach too was handled as poorly as Smart.

 

[Ultimate Car Guy]

Within the industry, the period between 2000-2010 is referred to as Daimler's lost decade (simlar to the way in which economists refer to the 90s as Japan's lost decade). During that period, we've seen:

1. Daimler's profit margins (9.4%) lag behind both BMW (12.8%) and Audi (12.2%).

http://europe.autonews.com/apps/pbcs.dll/article?AID=/20120208/ANE/302089865/1193. http://europe.autonews.com/apps/pbcs.dll/article?AID=/20111207/ANE/312079969/1131.

2. Mercedes Benz lost its sales lead to BMW in 2005 and Audi in 2011.

http://europe.autonews.com/apps/pbcs.dll/article?AID=/20110907/ANE/309079944.

3. Both BMW and Audi grew 5 times the pace of Daimler.

http://europe.autonews.com/apps/pbcs.dll/article?AID=/20110907/ANE/309079944.

4. Mercedes Benz average annual sales growth (1.4%) lag behind BMW (6%) and Audi (7.4%).

http://europe.autonews.com/apps/pbcs.dll/article?AID=/20120404/ANE/304049912

5. Mercedes Benz's share of the luxury car market to fell from 25% in 2001 to 21.4% in 2011.

http://europe.autonews.com/apps/pbcs.dll/article?AID=/20120404/ANE/304049912

As for the reasons for behind this predicament? I think everyone's mentioned most of them in above posts but for me, it can be summed-up in the following points:

1. They made some very bad decisions with Chrysler, Smart and Maybach
2. They underestimated their competitors
3. They inadequately innovated in the areas of sustainable and environmentally-friendly vehicles

 

[deity]

I do agree that BMW and Audi deserve the lead, but MB should see profits rise with the more competitive A/B/CLC range. And while the 3 is still decidedly the King, the gap is getting smaller, however minute.

 

[Cashmere]

The only real failures I can think of, are the R class and the management of the Maybach / Smart brands. Otherwise, just minor scratches in MB's armor.

 

[Sunny]

Saying MB lost it's edge cause of magazine comparisons is like Merc said - silly. But no denying Mercedes lost the edge when it comes to sales - from being top dog in luxury to 3rd in under a decade. But having said that, I think they are still the luxury brand with most brand cachet among the 3 germans in the upper echelons of the luxury market - they can make a 200k car tomorrow and sell them easily, I doubt either BMW or Audi can do it with the same ease (except when they make them in very limited quantities).

 

[Deleted member 1071]

In terms of sales, the new A-Class series of cars are destined to be successful. M-B should be able to capture a good number of younger customers with these automobiles. And should some of the more recent renderings of the upcoming C and E Class successors be relatively accurate, these cars will also command impressive sales. M-B has made some substantial headway in terms of assembly and detail quality in recent years. Exterior design arguably remains M-Bs' Achilles Heel. But I trust that M-Bs' directors are aware of this and will attempt to correct this as very soon as possible. BMW and Audi will retain very large market shares, but M-B is hardly dead in the water. These brands will coexist in the spirit of healthy competition (although the simple economy of scales appear to presently very much favor Audi).

 

[Monteverdi]

Whoah, whoah, Merc1. Why pick just one sentence from my post and wirte 23193129031280938 words about it? What I actually meant that MB is reported to be doing worse in both comparison tests and sales than the other german duo, keeping in mind that like 20 years ago they were head and shoulders above the rest.

 

[Mr. Mercedes]

Whoah, whoah, Merc1. Why pick just one sentence from my post and wirte 23193129031280938 words about it? What I actually meant that MB is reported to be doing worse in both comparison tests and sales than the other german duo, keeping in mind that like 20 years ago they were head and shoulders above the rest.

That's exactly what Merc 1 is adressing. Other than being undisputed at the top end, MB hasn't dominated comparison tests for the last 20 years or more. What made Mercedes what it is was the undisputed engineering integrity and quality, both of which are returning after a decade of mismanagement.

 

[Zafiro]

Having a star on the hood doesnt always help

Regarding 'image brand' I think MB is ahead of BMW and Audi.

 

[Wunderkind]

Could you elaborate?

At around the same time Daimler was talking to Chrysler about the merger, Ford was also being very acquisitive and needed to address its lack of competitiveness in Europe and also its lack of a serious presence in the luxury segment. Daimler and Ford talked about a merger but the Ford family (having majority voting rights) made it clear they would not cede control of the combined company. Daimler knew Ford was willing and had the resources to go hostile against it and it needed to do a deal to maintain its independence.

The rest, as they say, is history.

 

[EnI]

It's not that Daimler is a bad-managed company, or a bad company. It's like they currently do not perform as good as their direct rivals (AUDI & BMW). Perhaps due to "lost decade". But they are catching up. They sure are not lost. But ... there are some concernt for the future as well! Read below.

Also ... nothing & nobody can be #1 forever. We will certainly see BMW's fall from the throne sometimes in the future. It's inevitable. Especially the BMW brand, not so much the Group (incl MINI & Rolls-Royce). BMW Group will stay biggest premium carmaker yet BMW will lose its top position of best selling premium car brand.

The future ... Audi is (as said many times) very formidable rival! Being under VAG umbrella gives it unprecedented advantages. Be sure Piech aims to the top with Audi, and he'll reach it. Soon. It's all in-house development & sharing. It's cost effective. The know-how is amazing! When VAG's modular platforms are ready, be sure there will be tons of new Audi models, and consequently more sales. It will make Audi best selling premium car brand in the world soon. Although MB Group (incl Smart) will probably sell more cars than Audi yet less than BMW Group.

BMW vs MB ... I can see quite different approaches they have chosen.
MB is putting quite some bet on single alliance with Renault-Nissan. While BMW is diversifying it's cooperations with various carmakers (PSA, Toyota, GM, perhaps even Hyundai etc). It's sure one of the approaches will generate better results than the other. It will be interesting to who will emerge a winner here. Something tells me BMW's approach is better - since they cooperate with specific partner in specific field where the synergies are the greatest. While a single partner is hardly a perfect match. It's Chrysler / Rover story all over again. Daimler & Renault even exchanged some shares (Renault-Nissan has 3.1% share in Daimler, and Daimler has 3.1% share in Renault-Nissan). I understand the alliance with Renault (quite some synergies in commercial vehicles program as well; very compatible program) yet I'm not happy with Daimler's approach. After a failed marriage with Chrysler they seem to have find a new fiancée already. While BMW, after failed marriage with Rover, seems to pair with various "friends-with-benefits". Which can be ditched & changed more easily than a single partner you rely more heavily on. I'm afraid Daimler will be the loser here ... again.

 

[Wunderkind]

I agree with a lot of the statements above that Mercedes has turned a corner and is now on the road back to the top.

My fear however is that mercedes continues to lag behind in the important technologies such as low emission but powerful diesel and petrol engines that Audi and BMW seem to be some years ahead. Hybrid might be a problem too given Mercedes' lower production volumes. I'm not so worried about Mercedes' expertise in carbon composite engineering. BMW and Mercedes are quite far ahead of VAG in this regard. The only worry I have is some of the things Mercedes learned from EADS might be too expensive for car manufacturing.

 

[EnI]

At around the same time Daimler was talking to Chrysler about the merger, Ford was also being very acquisitive and needed to address its lack of competitiveness in Europe and also its lack of a serious presence in the luxury segment. Daimler and Ford talked about a merger but the Ford family (having majority voting rights) made it clear they would not cede control of the combined company. Daimler knew Ford was willing and had the resources to go hostile against it and it needed to do a deal to maintain its independence.

The rest, as they say, is history.

Ford was also sniffing around BMW much at that time. When BMW was vulnerable after Rover fiasco. The good thing about BMW AG has been they have a very strong & stable shareholder structure - with the Quandts as anchors. No such luck for Daimler. So BMW wasn't an easy & probable target for Ford yet Ford position was strong enough to force BMW into LandRover brand sales to Ford. The other interested party in BMW and LandRover was VAG. Interestingly at that time nobody was interested in MINI brand ... yet now many would like to have it in their own brand portfolio. No need to say nobody wanted Rover / MG either. And yet the Chinese are making MG a Chinese version of MINI (crossed with Nissan Juke somehow):

Will they make Rover a Chinese version of BMW? Could be ...

 

[klier]

Regarding 'image brand' I think MB is ahead of BMW and Audi.

BMW 15 years ago, sure. Now I'd say they're about equal. Audi? LOL. They'll never catch up in that regard. Forever a VW with lipstick.

In 4 years I predict a similar thread
"Reasons behind BMW downfall"

in 14 years, maybe. The coming 4 years are pretty much guaranteed to be successful. Not to mention most is already set for the coming 4 years (the launch of the i brand)

 

[Wunderkind]

Eni,

At that time, Ford always knew a deal with BMW was a long shot because the Quandts were never willing to sell or give up control to the Ford family. The Quandts stood by BMW even in the worst days.