About 1.3 million Mercedes recalled

[Sir_GT]

Originally Posted by crayzayjay I disagree. Merc's products are all highly competent. They just need to produce them better, it's not an impossible task. Volume = Economies of scale. Maybe Merc should be using joint ventures & partnerships in a better way

Errr... economies of scale is meant to create profitability, but the drawback is that it compromises quality control.

Ronin005 is absolutely right. Mercedes's main draw WAS their perceived quality, not the amount of products they had on offer. Trying to find a niche and fill it in with a product in order to reap financial benefits is the sort of strategy that a volume-based manufacturer would do. You cannot control quality with that many products as well as you can with just a few, which is Porsche's approach.

Mercedes has lost a lot of class because of the products they have on offer. Vaneo? Vanio? A-class? B-class? R-class? All unclassy milk-van vehicles, and Mercedes is supposes to be classy.

If anything, Mercedes should only have a C, E, S, SLK, CLK, and SL... maybe a CL. Then all the volume vehicles (Vaneo, etc.) should be produced under a different brand, in order to prevent erosion to the Mercedes marque, especially since those vehicle's level of quality is so far below the expected standard.

[crayzayjay]

Merc is a volume manufacturer. The strategy of identifying and filling niches can be profitable, look at Renault. And BMW has shown that you can make money in small cars. Economies of scale do not have to compromise quality control. Look at the Japanese. Merc's problem isn't the number of cars it produces, it's the way it produces them. As it reduces electronics and manufacturing complexity the quality of the products should recover. And while the Vaneo and other POS's dilute the value of the brand in our (enthusiasts) eyes, it hasnt stopped Merc selling tons of S-classes and a £300k supercar.

[crayzayjay]

:roll:

Let's try and put this in a simpler format.

1. strategy. Either you didn't understand any of my points, or you don't have a clue. I'm not comparing Renault and MB products, but a particular business strategy.

2. brand. I wasn't talking about how good the SLR is, just the fact that Merc is able to sell it despite the brand dilution of pieces of shit like the Vaneo.

3. costs. I was just stating that some of Merc's manufacturing inefficiencies, shall we say, and numerous financial inefficiencies (but let's keep this simple), have combined to force the company to cut costs wherever it could and thus compromise quality and reliability. Merc can't price itself out of trouble, that's another problem. And comparing it to Porsche, such genius... Sure, why doesn't Merc restrict itself to selling oh i don't know, three products, and cut its market cap overnight...


but thanks for the oh so helpful tips on how to compare car companies. I'll remember to come to you for advice :roll:

[crayzayjay]

Ah but you see, Merc's high fixed-asset cost base means any change in sales is magnified down to the profit line. Merc NEEDS to sell more products. Admittedly, they have made expensive mistakes (Smart), but as manufacturing techniques are righted and the dollar hopefully stabilises, they'll have a much rosier outlook.

VW's problem is that, like all German car companies, it is run by engineers. Sadly for VW, it is the only one that isn't a luxury brand (vs Merc, BMW, Audi) so it cant get away with charging £50k for a Phaeton.

[Sir_GT]

Originally Posted by crayzayjay Ah but you see, Merc's high fixed-asset cost base means any change in sales is magnified down to the profit line. Merc NEEDS to sell more products. Admittedly, they have made expensive mistakes (Smart), but as manufacturing techniques are righted and the dollar hopefully stabilises, they'll have a much rosier outlook.

Although I won't disagree with you entirely, I do think that even with the high fixed-asset costs Mercedes has to deal with, (which shouldn't even have been there in the first place) there is still a way to work with it, without having to dilute the brand name.

As you can see, I'm a marketing guy. 8)

IIRC, the production lines of Mercedes's main models (C-class, E-class, S-class) do not cross with their bottom range models, such as the A-class, Vaneo, and the Vanio (name?). IIRC, even the B-class is based on a stretched A-class platform.

My point is, instead of releasing shit cars with a silver star on them, Mercedes should have instead created/used a brand with a lower level of quality expectancy (Chrysler perhaps?), and sold the cars in question under that banner. Theoretically, this would mean that instead of having the resources needed for quality checks being spread out across a growing list of products carrying the badge and only producing average results, Mercedes could effectively focus most of their quality control resources towards their "main" products (the ones that should carry the badge), maintain a high level of quality control, maintain brand equity, and still produce the volume needed to create a profit through their "budget" brand.

A few years ago, when you thought of Mercedes-Benz, the one image that would have NEVER popped into your mind was the image of a battalion of delivery vans.

I mean, I could imagine a redneck american bragging about "muh new Muhsaydeez" and somebody going "really now? which one?"

"That vanee-something... ah like it... fits muh dawg, a'couple'ah trays o' budweiser, muh shawtguhn, an' muh lounge chair.... *burp!* nice seats too... all patterned and shit... and that silvuh star man... the chicks really dig it."

Crikey. :roll:

[crayzayjay]

I do agree about the Vaneos, Sprinter vans, etc, being bad for the brand, but it's not as easy as you make out to create a new brand, nor is it attractive to badge them Chrysler due to the lower margins (if any). Merc's reasoning is that it can at least charge more for them with a premium badge on the bonnet. The mistake it made was neglecting the effect sub-par quality would have on the brand. And now they're shelling out millions of euros each year to fix that.

Originally Posted by Sir_GT As you can see, I'm a marketing guy. 8)

And i'm a finance guy. We were born to disagree

[Sir_GT]

^^^ true.