EddieGTP

http://www.autoextremist.com



by Peter M. DeLorenzo

Stuttgart, We Have A Problem.

Detroit. It's not often that we disagree with our colleagues at the industry's chronicle of the unending tedium that goes on in the auto biz from week to week, but in this case, we have to. The Automotive News editorial page this week was rife with advice for DaimlerChrysler - after they made sure that they buried Wolfgang Bernhard in no uncertain terms. What they think about Bernhard is their prerogative, but they missed the point completely about the current state of Mercedes-Benz. Automotive News stopped just short of canonizing Mercedes-Benz in their glowing assessment of the "proud" company and the three "mature" executives in place now ready to lead the company to the promised land - Dieter Zetsche and Tom LaSorda at the Chrysler Group, and Juergen Hubbert at Mercedes. But the reality facing Mercedes-Benz does not seem to be registering with Keith Crain and Company.

Consider this scary analogy: Mercedes-Benz is right where GM used to be - in terms of the imperial attitude, the self-righteous indignation that anyone would deign to think that they need to change, the unfathomable confidence that they're right and the rest of the world is wrong, and the uncanny belief that things will get better right around the corner. (Okay, so maybe GM hasn't completely forgotten how to be all of those things - but there are definitive signs of progress down at "The Tubes.") But what GM found out the hard way, Mercedes-Benz is hell-bent on refusing to even acknowledge. And that's a recipe for disaster.

If you could wade through the platitudes bandied about and ladled on Mercedes-Benz and its leader Juergen Hubbert in Automotive News (Keith Crain described Hubbert in his column, saying, "He has the experience, style and character that one of the great icons of the automobile industry deserves in its leader.") - it becomes clear that AN has been drinking the Stuttgart Kool-Aid and is buying the company line - the one that begins with refusing to acknowledge that there's even a problem to begin with.

Mercedes-Benz as a brand - and as a company - is in serious trouble. They have squandered their image in the U.S. to the point that the brand has lost its distinctiveness. Their forays down-market and their strategy of making the brand more "approachable" have been disastrous - sinking the brand into Payment Hell and leaving dealers to fend for themselves in the high-volume, low-return, vast wasteland otherwise known as The Middle of the Market. This "strategy" was matched for its sheer folly by the fact that the cars being churned out by M-B to satisfy the Two Juergens (Schrempp & Hubbert) were delivering abhorrent quality numbers the likes of which Mercedes owners (and dealers) had never even imagined.

Juergen Hubbert may have experience, style and character, but he has presided over one of the biggest brand slides in automotive marketing history. And beyond the marketing fiasco, under Hubbert's watch, Mercedes-Benz has bloated its dealer body here in the U.S. so that now the brand has too many dealers. And to feed those dealers they have to pump up the volume and play in segments where they don't belong - reducing the brand's "specialness" right down to a thread. And on top of that, Mercedes has now irreparably damaged their quality reputation, allowing several other brands entry to a plateau they used to happily occupy by themselves.

Hubbert has managed to pile one bad strategy, on top of a bad decision, after another. Mercedes-Benz is facing a slew of problems - and their response is to make a commitment to the leader who put them there - and the staid old way of doing things that contributed to their inevitable decline in the first place?

Nonsensical, ridiculous and unbelievable are the words that come to mind.

But by far the biggest problem facing Mercedes-Benz? Attitude.

Keith Crain got it right - if he were writing an editorial about Mercedes back in another time. But the fact of the matter is that today, Mercedes-Benz is having a real problem dealing with reality - and it's not a pretty picture. Their "What, Us Worry?" attitude is killing them slowly - but surely.

Mercedes may have once occupied a place as one of the great icons of the automobile industry, but it's a new and decidedly different era. There are several top-notch competitors out there doing things better than Mercedes is right now - and they're only going to get better.

And the only answer Mercedes-Benz can come up with is that what was good enough before will be good enough again - just like old times.

Stuttgart, we indeed have a problem.

To compete in this new world automotive order, Mercedes-Benz needs vision and creativity and passion. You don't light a fire under a bankrupt culture that is buried in the past and intent on seeing the world as it used to be, by patting people on the back and suggesting that "we're just in a bit of a bad spot right now" and move on.

That's just not going to cut it in the 21st century.

Which was exactly Bernhard's point, come to think of it.

Thanks for listening, see you next Wednesday.

Peter M. DeLorenzo founded Autoextremist.com - an Internet magazine devoted to news, commentary and analysis of the automotive industry, automotive marketing, strategy and product development - on June 1, 1999. Since then, Autoextremist.com has become a weekly “must-read” for leading professionals within and outside the industry, including top executives at the car companies, suppliers, dealers, journalists, financial analysts, enthusiasts, and people directly involved in motorsports. Prior to launching the site, Peter spent more than two decades in automotive advertising and marketing, holding top-level positions as CD and ECD at agencies including DMB&B, William Esty, BBDO and Campbell-Ewald. In addition to his editorial work on Autoextremist.com, Mr. DeLorenzo occasionally consults for enlightened automobile companies. The opinions expressed in his columns are his, and his alone, and do not necessarily reflect those of his clients - JJP

Incendiary

I mostly agree. I don't think going "downmarket" hurt them, although I'm not sure what the author means by that term. (C-Class coupes? C-Class as a whole?) I think MB just needs to improve quality and reliability (in the US, particularly), and maybe put a little cash into its dealerships to help them build more service bays and hire more people. If they do that, they're pretty much right back on track. Better materials for the interiors wouldn't hurt things, either.

I also wouldn't mind more manual tranny offerings and better handling, but I don't think those hit the majority of the MB target audience...