"Pride goeth before destruction,
and an haughty spirit before a fall." Proverbs 16:18
Mercedes-Benz is recovering from a long downturn in the wake of the poorly considered Chrysler takeover.
With so many middle market brands struggling to move upscale, Mercedes was in the opposite position. They needed to expand down market to capitalize product development costs over a wider sales base.
At the time the Chrysler deal looked like a way to do this.
Broadening a luxury car product line with cheaper cars runs the risk of image dilution.
If Mercedes took on Chrysler's blue collar image, would they loose the perception of quality that took so long to build?
As management obsessed with integrating two disparate cultures, brand images, and engineering models, boardroom intrigue took over. Eventually shareholder groups revolted.
In Stuttgart, executives and engineers condescended on what they considered inferior products, alienating American personnel.
Out here in Texas, Mercedes buyers grew tired of the “so how is your new Chrysler” jokes.
Mercedes' image of quality, which took 90 years to build, suffered substantially.
Quality survey results lagged Lexus and other luxury brands.
In the J.D. Power and Associates 2006 Customer Retention Study, Mercedes ranked 8th out of 37 makes. A respectable 53.6% of those surveyed returned to purchase another vehicle.
BMW, despite some similar problems, snatched market share.
A Bridge Too Far
With the complex electronics being integrated into modern cars, mistakes are inevitable.
High tech cars are an engineering challenge: change one parameter and multiple things somewhere else change with it.
A wise man is quick to recognize and fix his mistakes, often before others notice.
Arrogant men cannot do this.
With top executive and engineering talent sent to Detroit, further obstacles arose.
This is a company offering products from the low thirties to over $400,000.
The down-market push, featuring M-class SUVs and A-class compacts, is responsible for much of the bad press.
With a Chrysler sale finalized, management can focus on restoring the brand.
Mercedes quality issues have improved dramatically in the last couple of seasons. Consumer Reports is still all over them, with 2007 predicted reliability scores at the bottom.
JD Power's 2006 Initial Quality study, which employs questions aimed at subjective aspects of the ownership experience, placed Mercedes 25th out of 37 brands.
Lord, won’t you buy me a Mercedes Benz ?
MB had a reputation as the world's best, and to retain that perfection was expected. Mercedes still gets high marks for performance, handling, comfort, and safety.
And Mercedes still makes outstanding vehicles. Buyer loyalty is high and residuals are good.
MB does not have globalization issues, the cars are sold in 130 nations. US annual sales have grown consistently, to the mid 200,000 area.
Since 1994, the "Smart" line of urban cars have been part of the Mercedes-Benz Group. Efforts to market the little 2 seaters stateside are underway.
Mercedes-Benz USA reported February 2007 sales of 17,304 units, unchanged from a year earlier.
Of Ward’s 500 dealerships, Mercedes dealers consistently average the highest revenues of any brand.
329 US dealerships include 24 in Texas.
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