Mercedes vs. the Economy
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Joined: Mar 2002
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From: SF Bay Area
C240
Mercedes vs. the Economy
Does anyone else think that Mercedes is going to be in a world of hurt soon (even more so than they are with chrysler)? I know its impossible to generalize but with the stock market approaching five year low's, trillions of investor wealth down the drain, talk of a real estate bubble which has done a lot to fund middle income spending and growing structural joblessness especially among white collar professionals (as opposed to blue collar in the past). I understand the economics of the luxury market (i.e - the rich get richer in recessions) but Mercedes isnt really in that class except for the S/SL/CL which are sold in small quantities overall. The auto industry has kept production going by discounting and free financing but the well is running dry. I think Mercedes is in trouble because there is such a large premium on their new models (i.e - E class/CLK) compared to similar, though older BMW and Audi models. plunking down 60K for a mid size car smaller than the Accord is a stretch.
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Joined: Nov 2001
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From: NYC
C32 AMG, C300 Sport
I would agree except, this has been MB best year ever
their sales have never been this good and they are on the rise. The E class is selling like never before and I have a feeling they are selling a fair share of big ticket items. I see SL500's all over the place. Alot of people are going on the "only live once" premise, and getting things they always wanted. They already have over 100 orders for the Maybach! Im not cryin for MB... sorry.
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From: Los Angeles, CA
1973 280
Everything happens in cycles, usually 10-20 years long. During the 1990s everyone was ashamed of wealth. During the 1980s everyone flaunted it. Honestly, has Mercedes EVER seen better US sales than during the 1980s??? I feel that the new millenium will prove very profitable for the company. I also see new SL5's everywhere, along with a ton of S500 sedans and a handful of S55 AMGs. I'm really glad about it!! Also, look at the C-Class cars. That whole class unto itself is a car company. There is a C-Class in every guise!! It's great! I truely beleive that Merc is making a massive come back. 
Thread Starter
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Joined: Mar 2002
Posts: 125
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From: SF Bay Area
C240
OK we just hit a six year low in the Nasdaq today. My post wasnt about what has happened in the past year moreso what will happen in the future. Its been shown that home prices take about two years to deflate after a stock market crash due to the increase in liquidity from people pulling money out of stocks and drop in interest rates - i think were in a huge housing bubble nationally and especially markets like Boston, SF, San Diego, Denver. Consumers are tapped out - theyve borrowed against the equity in their homes and taken advantage of "free money" to finance new cars - unemployment is not high compared to historical levels but its getting there and from where i sit its going to get a lot worse. Usually layoffs has been a lagging indicator in past recessions but as we saw 2 years ago they became a leading indicator that the economy was in serious trouble and another round of layoffs shold throw us into the double dip that people thought couldnt happen. I think the difference in past recessions was that Mercedes was a niche manufucturer selling to a "recession proof" audience. Now Mercedes needs volume to maintain the sheer size of the company and they will have to resort to tactics other manufacturers use. The new E Class has to set sales records over the older model to justify the cost of research and development - anything less would be a disaster but in this kind of market i don't think its possible especially at the relative prices that Mercedes is asking
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From: Bay area
'01 CLK 55
I agree with Mercedes 101. It is a proven fact that prosperity and continued expansion CANNOT occur, let alone be maintained without healthy capital markets. Period. Having been in the industry as an institutional broker since 1982 and lately as a private money manager, I can honestly say that I don't like what I see, I don't see conditions improving in the near future, and that things will get worse before they turn. How much worse remains to be seen. Unfortunately, just as the Iran hostage situation in the late 70's and the Gulf war adversely affected the world economies, Iraq is the wild card that will most determine the course of the global economic future in the near term.
