Mercedes cut German sales target - Page 2

Hypersonic · 11-07-2005, 10:03 AM

Merc1 I think the situation at Daimler is considerably worse than at VAG - there is talk of breaking the company up although some analysts say that is unlikely because of the vast costs involved with taking over Chrysler, it just wouldn't be worth their while.

Quote:

What's more, Chrysler's 75,000 retirees have saddled the company with a pension plan that is underfunded by $8 billion. Chrysler also carries $17 billion in unfunded long-term retiree health-care obligations. That means any acquirer would probably want some additional cash injected into Chrysler just to take it over, says one senior banker in London close to the company. The problem: "Daimler needs its cash to fix Mercedes," says the banker. "There's not enough money to go around. You'd be cutting off your nose to spite your face."

Quote:

But German bankers and private-equity guys are already doing the math. Bernstein's Cheetham estimates Daimler's commercial-truck business, which earned a huge $1.5 billion in the first six months of 2005, is worth $11 billion to $28.7 billion. Mercedes itself could bring $36 billion, assuming the operating margin of 6.5% it has averaged over the last nine years. The price Chrysler could fetch would depend on its performance at the time of sale. Cheetham figures it could bring around $6 billion based on a "normal operating margin" of 3%. "We expect the calls for a breakup to become even louder," he says.

I still don't entirely discount the possibilty that Daimler and Chrysler might go their separate ways - it hasn't been an altogether happy marriage - and if we are to be honest about it, it was more a takeover of Chrysler by Daimler than a merger of the two. Unfortunately Daimler seem to have underestimated the costs involved with getting Chrysler back into the black - this has come at a huge cost - worst of all, to Mercedes.

We shouldn't underestimate this situation guys, it really is bad and there is still the possibility that the company could be broken up - Smart would probably be the first to be sold.

martinbo · 11-07-2005, 11:03 AM

Some very interesting reading in this thread. Hats off to the contributors as discussion at this level is hard to come by round here. Things look bleak for Mercedes at the moment and the prospect of a global automotive down-turn and even economic recession in many key markets doesn't bode well further.

Tine - you're a boffin at this - are you able to provide us with some stats showing, say, global cars sales figures for 2003-2005? In the same light could we see the same total industry sales numbers for the German market?
If my memory serves me correctly both BMW and VWAG have sold more units this year than last despite a relatively static German domestic market.

A big worry for Mercedes Benz is the conflict that arises from attempting to share technology across the brand divide that exists between Mercedes Benz and Chrysler. Such action is much much easier said than done, especially when the brand value of prestige marque is at stake. No-one wants to see a badge-engineered Mercedes version of a Chrysler. Especially not current and future Mercedes owners. Unlike VWAG which has cleverly disguised the sharing of common engines, suspension systems and base platforms resulting in distinctly different Volkswagen and Audi brand images, Mercedes Benz and Chrysler's brand DNA doesn't lend itself to transplanting. A Chrysler Neon and Merc C-Class can't ever share the same development life-cycles and technology so great is the rift between each car from every aspect. Sure, there is the potential for some sharing, such as the odd turbo-diesel being shared between the ML and the Grand Cherokee but that's about as far as it goes in my book.

The brands are simply too disparate to lend themselves to meaningful, mutually beneficial technology overlap. Imagine the new, facelifted E-Class with a HEMI V8. Heaven forbid.

Sell Smart? Good, but not enough you'll all say. So what would you do if you were the CEO of Mercedes Benz?

gustavo · 11-07-2005, 12:20 PM

nothing to worry about guys. MB is on a good way with the new products.

It seems to me that the press media likes to bash MB for old failures with pleasure and the bmw fan boys here are getting every time wet

I'm not biased btw, I'm driving BMW

warot · 11-07-2005, 12:50 PM

In my opinion, Benz need to revert back to the old ways.
1. Get rid of Smart. it will do nothing good for Benz for years to come. Even when they say that it will start being an asset, I think it will be too late.
2. Put all Maybach projects on hold... I don't know how well Maybach is doing. Are they helping or being a problem?
3. All these unecessary classes B and R for example should go IMO. And you especially don't need AMG models for those.

This is a worst case scenario though. I think Benz should focus on their core models instead of trying to expand to different categories. Focus on the C and E class and I think Benz will turn around. But if they want to spend 30 percent of that money to create a Y-class.

gustavo · 11-07-2005, 04:53 PM

Quote:

Originally Posted by warot

In my opinion, Benz need to revert back to the old ways.
1. Get rid of Smart. it will do nothing good for Benz for years to come. Even when they say that it will start being an asset, I think it will be too late.

Time will tell. Closing the factory will be more expensive. They have to change
the price model for ForFour and the next 451 should be a success, otherwise it's really too late

Quote:

Originally Posted by warot

2. Put all Maybach projects on hold... I don't know how well Maybach is doing. Are they helping or being a problem?

Luxury segment is currently not going well. But wether BMW nor VW are willing to shut down their luxury brands.

Quote:

Originally Posted by warot

3. All these unecessary classes B and R for example should go IMO. And you especially don't need AMG models for those.

Ok , let's crush the C Class coupe, but diversification is essential for every car maker, even Porsche is doing it.

Quote:

Originally Posted by warot

This is a worst case scenario though. I think Benz should focus on their core models instead of trying to expand to different categories. Focus on the C and E class and I think Benz will turn around. But if they want to spend 30 percent of that money to create a Y-class.

I think they are doing well. The B-Class is a competitor to the A3 Sportback
and the GOLF Plus and others. The R Class, build on the same platform as the M and the upcoming G Class, is an attampt to enter a new segment, at least in the States. We will see....

Hypersonic · 11-07-2005, 08:34 PM

Some of you are just not grasping the situation very well at all. DaimlerChrysler, in essence, can't afford to keep both marques (Chrysler and Mercedes) running in the black - the situation is a lot worse than you are comprehending - it's not just a matter of cutting a few models from Mercedes range and then everything will be good. DaimlerChrysler needs more cash to rescue Mercedes but it also has huge costs at Chrysler. That part about selling the commercial-truck division is bad, that is very profitable - I hope they don't do that.

Alx · 11-07-2005, 08:39 PM

MB also eliminated 8500 workers, by far not a good sign.... please see this thread....

http://www.germancarzone.com/showthread.php?t=923

NSL · 11-07-2005, 08:56 PM

Quote:

Originally Posted by Roberto

Merc1 I think the situation at Daimler is considerably worse than at VAG - there is talk of breaking the company up although some analysts say that is unlikely because of the vast costs involved with taking over Chrysler, it just wouldn't be worth their while.
I still don't entirely discount the possibilty that Daimler and Chrysler might go their separate ways - it hasn't been an altogether happy marriage - and if we are to be honest about it, it was more a takeover of Chrysler by Daimler than a merger of the two. Unfortunately Daimler seem to have underestimated the costs involved with getting Chrysler back into the black - this has come at a huge cost - worst of all, to Mercedes.

We shouldn't underestimate this situation guys, it really is bad and there is still the possibility that the company could be broken up - Smart would probably be the first to be sold.

Roberto,
We are on the same wavelength. Here's what I posted earlier:
http://www.germancarzone.com/showpos...7&postcount=34

Hypersonic · 11-07-2005, 09:02 PM

Thanks for that AlxAmg and NSL

I still have faith in Mercedes, and still don't think the situation is totally hopeless, but lets not fool ourselves here. Some of you seem to think that all Mercedes needs to do is drop a few models and get it's quality back up to scratch. What you are missing is that the problems faced by DaimlerChrysler are much bigger than that. The huge job losses at Daimler is a further indication of just how drastic things now are at Mercedes - it's going to be a tough few months for them and they may not emerge from their battle the same company we know right now - there are already "sharks circling" waiting for the opportunity to pick over the company - lets hope it doesn't come to that.

gustavo · 11-07-2005, 09:55 PM

Quote:

Originally Posted by Roberto

Thanks for that AlxAmg and NSL

there are already "sharks circling" waiting for the opportunity to pick over the company - lets hope it doesn't come to that.

The Chrysler desease infected the brand Mercedes. Mercedes or the upcoming DC owner should go the way BMW has done with Rover. Sell the stinky fish Chrysler!

11-07-2005, 11:03 AM	#12 (permalink)
martinbo Fanatic Moderator Emeritus Join Date: Sep 2005 Location: Johannesburg Posts: 1,250 Thanks: 136 Thanked 202 Times in 114 Posts	Re: Mercedes cut German sales target Some very interesting reading in this thread. Hats off to the contributors as discussion at this level is hard to come by round here. Things look bleak for Mercedes at the moment and the prospect of a global automotive down-turn and even economic recession in many key markets doesn't bode well further. Tine - you're a boffin at this - are you able to provide us with some stats showing, say, global cars sales figures for 2003-2005? In the same light could we see the same total industry sales numbers for the German market? If my memory serves me correctly both BMW and VWAG have sold more units this year than last despite a relatively static German domestic market. A big worry for Mercedes Benz is the conflict that arises from attempting to share technology across the brand divide that exists between Mercedes Benz and Chrysler. Such action is much much easier said than done, especially when the brand value of prestige marque is at stake. No-one wants to see a badge-engineered Mercedes version of a Chrysler. Especially not current and future Mercedes owners. Unlike VWAG which has cleverly disguised the sharing of common engines, suspension systems and base platforms resulting in distinctly different Volkswagen and Audi brand images, Mercedes Benz and Chrysler's brand DNA doesn't lend itself to transplanting. A Chrysler Neon and Merc C-Class can't ever share the same development life-cycles and technology so great is the rift between each car from every aspect. Sure, there is the potential for some sharing, such as the odd turbo-diesel being shared between the ML and the Grand Cherokee but that's about as far as it goes in my book. The brands are simply too disparate to lend themselves to meaningful, mutually beneficial technology overlap. Imagine the new, facelifted E-Class with a HEMI V8. Heaven forbid. Sell Smart? Good, but not enough you'll all say. So what would you do if you were the CEO of Mercedes Benz?

11-07-2005, 12:20 PM	#13 (permalink)
gustavo Inactive Account Join Date: Oct 2005 Location: South Germany Posts: 151 Thanks: 0 Thanked 0 Times in 0 Posts	Re: Mercedes cut German sales target nothing to worry about guys. MB is on a good way with the new products. It seems to me that the press media likes to bash MB for old failures with pleasure and the bmw fan boys here are getting every time wet I'm not biased btw, I'm driving BMW

11-07-2005, 12:50 PM	#14 (permalink)
warot Fanatic Join Date: Sep 2005 Posts: 2,413 Thanks: 31 Thanked 93 Times in 53 Posts	Re: Mercedes cut German sales target In my opinion, Benz need to revert back to the old ways. 1. Get rid of Smart. it will do nothing good for Benz for years to come. Even when they say that it will start being an asset, I think it will be too late. 2. Put all Maybach projects on hold... I don't know how well Maybach is doing. Are they helping or being a problem? 3. All these unecessary classes B and R for example should go IMO. And you especially don't need AMG models for those. This is a worst case scenario though. I think Benz should focus on their core models instead of trying to expand to different categories. Focus on the C and E class and I think Benz will turn around. But if they want to spend 30 percent of that money to create a Y-class.

11-07-2005, 08:34 PM	#16 (permalink)
Hypersonic Connoisseur Join Date: Sep 2005 Posts: 5,590 My Mood: Thanks: 1,063 Thanked 882 Times in 538 Posts	Re: Mercedes cut German sales target Some of you are just not grasping the situation very well at all. DaimlerChrysler, in essence, can't afford to keep both marques (Chrysler and Mercedes) running in the black - the situation is a lot worse than you are comprehending - it's not just a matter of cutting a few models from Mercedes range and then everything will be good. DaimlerChrysler needs more cash to rescue Mercedes but it also has huge costs at Chrysler. That part about selling the commercial-truck division is bad, that is very profitable - I hope they don't do that.

11-07-2005, 08:39 PM	#17 (permalink)
Alx 007 Join Date: Sep 2005 Location: -Poconos, PA.- 2005 Aston Martin DB9 Posts: 5,458 My Mood: Thanks: 886 Thanked 551 Times in 224 Posts	Re: Mercedes cut German sales target MB also eliminated 8500 workers, by far not a good sign.... please see this thread.... http://www.germancarzone.com/showthread.php?t=923

11-07-2005, 09:02 PM	#19 (permalink)
Hypersonic Connoisseur Join Date: Sep 2005 Posts: 5,590 My Mood: Thanks: 1,063 Thanked 882 Times in 538 Posts	Re: Mercedes cut German sales target Thanks for that AlxAmg and NSL I still have faith in Mercedes, and still don't think the situation is totally hopeless, but lets not fool ourselves here. Some of you seem to think that all Mercedes needs to do is drop a few models and get it's quality back up to scratch. What you are missing is that the problems faced by DaimlerChrysler are much bigger than that. The huge job losses at Daimler is a further indication of just how drastic things now are at Mercedes - it's going to be a tough few months for them and they may not emerge from their battle the same company we know right now - there are already "sharks circling" waiting for the opportunity to pick over the company - lets hope it doesn't come to that. Last edited by Hypersonic; 11-07-2005 at 09:11 PM..

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