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Fixing Mercedes

Posted by: Gail Edmondson on June 28, 2006

DaimlerChrysler boss Dieter Zetsche has set the bar high for Mercedes. He aims to match the quality of Toyota’s upmarket Lexus brand in the annual JD Power Initial Quality Study rankings by 2008. That’s a stretch goal given all the electronics Mercedes and other German premium automakers jam into each new model to improve safety and handling. Toyota reuses many components from one model generation to the next — improving reliability while leaving cutting-edge development to the Germans.
Boosting quality is exactly what Zetsche needs to do to polish the tarnished star. And the cure is none too soon. In Europe, which accounts for 64% of Mercedes’ global sales, Toyota aims to nearly double its sales of Lexus in Europe to 45,000 this year and to reach 65,000 by 2010. And so far, Lexus is right on target: Its sales this year to date are up 100% in Europe, and even more in Germany.
Lexus’ goal to hit sales of 65,000 in Europe is a major threat to Mercedes S-Class, which sold 70,000 sedans worldwide last year. Given the dent Mercedes has suffered over the past five years on quality, many see the company as particularly vulnerable to the Lexus quality juggernaut. With BMWs and Audis churning out cars that are more stylish and more fun to drive, and Lexus offering better quality, no wonder Zetsche is stepping on the gas.

Reader Comments

Joel A

June 28, 2006 12:11 PM

Seems that so-called "German" loyalty to domestic brands is crumbling to better styling and reliability.


July 15, 2006 7:59 AM

Actually, German brand loyality is not crumbling at all. Maybe Mercedes brand loyality is crumbling, since Mercedes has had a lot of technical problems lately. If at all, there might be a shift to other European luxury brnds like BMW, which has extremely strong sales, and Audi.

Actually, the numbers given in the report are a little misleading. Not all of the 65,000 cars Lexus plans to sell in Europe this year are LS', as the comparison with the S-Class implies, but instead most of them will be IS', which is finally a serious contender in this market in Europe.

I don't think the Germans have to fear the Japanese competition on their homemarket any more than they had to before. What Mercedes in particular has to take care of, though, is that the brand is not diminshed by the recent technical problems. Mercedes has always stood for great build quality and innovation, and that's why these cars sold for a premium. Given the tough local competition (Audi, BMW) I'm sure a lot of people would think twice to pay this premium, if the quality issues aren't resolved any time soon.


August 3, 2006 9:20 AM

I think Mercedes is doing a great job of turning their name around, and to me it really started with a website that even I now frequent.

I have been following it for the past couple of months and it actually conviced me to purchase the S-Class instead of a new BMW. Every quality issue I ever had with Mercedes was addressed here.

If Dieter came up with this idea, I have to say it was pure genius, beats every Dr. Z commercial out there


August 14, 2006 8:06 AM

DaimlerChrysler is a foundation member of a worldwide research group with all the other European auto manufacturers which evaluates particular operating standards in electronic called AUTOSAR. Mercedes-Benz quality continues to improve. LEXUS is a company with no heritage as a specialist manufacturer. European luxury is based on heavy investment and originality. Even LEXUS may find it impossible to be first in this class thoroughbreds: MAYBACH BENTLEY and ROLLS ROYCE... Made in Germany.

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