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  • Mercedes Benz, it is perhaps the biggest name in luxury cars in the world.

  • Sure, there are Italian exotics like Lamborghini, stately British brands such as Bentley,

  • Rolls-Royce and Aston Martin, and plenty of competition in Benz's home country of Germany.

  • But the German make with the three pointed star logo is for countless buyers around the world.

  • The brand to aspire to.

  • It has a reputation for superb build quality and excellent engineering.

  • It also has an extremely strong pedigree, including bragging rights that its founder, Karl

  • Benz, invented the world's first production automobile.

  • Mercedes Benz has been a dominant force in racing, a relentless innovator, a symbol of the

  • pursuit of excellence no matter the cost, and for its buyers, a sign they have finally made it.

  • But today, it faces a new class of challenges.

  • Electric vehicles are coming into the world, pushed by eco conscious policy makers and at least

  • a few eager buyers.

  • Tesla has become an aspirational brand for younger consumers, and there is a slew of other EV

  • hopefuls vying for the mantle of the next generation's aspirational vehicle.

  • Meanwhile, Mercedes said in February that it will not be offering its electric Oecussi sport utility

  • vehicle in the U.S.

  • for now, even though the vehicle has been in production since 2019.

  • Mercedes Benz has had a magnificent run, but those who study the global auto industry say it is

  • undergoing one of the most dynamic and uncertain periods in its history just a few years ago.

  • U.S. auto sales hit historic highs, but automakers have had to sink billions into new technologies

  • and contend with a new crop of competitors in the key Chinese market and around the world.

  • Mercedes Benz has been a leader since the birth of the automobile.

  • What it does now may determine whether it remains a leader.

  • Mercedes Benz traces its history back to the 30s and to three pivotal figures, Gotlieb, Dimler

  • Vilhelm, Maibach and Karl Benz, Dimler for whom Mercedes long time parent company is named, was an

  • engineer who developed the engines that powered the earliest Mercedes cars.

  • Maibach, whose name now graces a line of ultra luxury cars, was the company's first technical

  • director. And Karl Benz was the inventor of what is widely considered the first true gasoline

  • powered, commercially available car.

  • In addition to that, Benz Dimler and Maibach participated in the world's first known motor

  • sport event, a 126 kilometer race from Paris to ruin in 1894, organized by a

  • French newspaper publisher, the event placed steam, gasoline and even battery driven vehicles

  • side by side.

  • Nine of the 17 vehicles to cross the finish line had Dimler engines in them, including the first

  • four to finish the race.

  • In other words, there are a few brands that can match Mercedes Benz as automotive pedigree.

  • That first race began one of the richest histories in international motor sport.

  • Unfortunately, Mercedes Benz left racing four decades after a catastrophic accident in 1955 at

  • the 24 hours of them on race, a three way crash with a Jaguar and an Austin Heeley centa Mercedes

  • Benz car flying into the stands.

  • Somewhere around 80 people died.

  • Mercedes Benz did not return to racing until 1989.

  • As of twenty one Mercedes sponsors, one of the most successful Formula One teams in history.

  • Its drivers have together won seven consecutive double world championship titles, the most ever.

  • Its innovations in racing, tech and in cars have often seeped into its production vehicles.

  • The racing program has also produced some iconic vehicles, including the 300 SL with its trademark

  • Gullwing Doors, the two seater sports car.

  • It was developed in 1952 and went on to win races at Lehman Burnrburgring and the Karara

  • Panamera.

  • It was released to the U.S.

  • public in 1954.

  • The move was motivated by a U.S.

  • importer who convinced the company there would be strong demand for the car.

  • It's track success helped the company form a reputation for superb engineering, quality

  • materials, innovation and execution.

  • They've often been first to market with a variety of technologies from being the first arguably the

  • first car, you know, to things like the first diesel engines in the 1930s, the first fuel

  • injected engines in the 1950s with the the 300 Essl.

  • And more recently, a lot of the active safety systems that were the first with an electronic

  • anti-lock brakes, systems and traction control and stability control systems.

  • So they they have been a leader throughout their entire history.

  • Its cars didn't rise to the top by always being the most feature rich or even the most luxurious.

  • What buyers were paying for was a leaner, simpler car built very, very well.

  • What you were paying for and what you know, what the customer was happily paying for was the

  • prestige of having a car that was engineered like no other car in the world.

  • You were paying for quality.

  • You were paying for engineering.

  • And that was the prestige.

  • It wasn't it wasn't the features.

  • It wasn't the luxury necessarily.

  • It was the it was the engineering, that and quality that really form the backbone of that

  • brand's image.

  • The company goes to some striking lengths to back up this reputation for attention to detail.

  • For example, like many other automakers, Mercedes Benz has its own in-house performance tuning

  • division known as AMG.

  • AMG began as an independent tuning shop that Mercedes later acquired, but AMG is somewhat

  • unusual in that engines for many AMG cars are each hand built by a single engineer at a time.

  • Each engine has a plate etched with the builder's signature.

  • Whenever we do brand image ranking exercises with consumers without almost without fail, Mercedes

  • Benz always comes out at the top.

  • It's always the top, most aspirational brand, even even among people that aren't necessarily

  • interested in owning a Mercedes Benz themselves.

  • They still see Mercedes Benz as being at the top.

  • Of course, not everything has been perfect, while Mercedes is known for excelling in engineering,

  • they haven't fared as well in assessments of other features, especially electronics and systems

  • such as the Infotainment Control's.

  • Mercedes has also struggled with quality control issues.

  • The brand's reputation began to take hits in the 1990s, and those persisted throughout the early

  • 2000s.

  • They frankly took their eye off the ball and I think they got little complacent cut costs a lot

  • and now it takes a long time to.

  • Turn that around, and they did that.

  • We have them with that.

  • They move pretty quickly to rectify these problems and try tried to avoid doing that again

  • because Yeah, a scientist, cannot afford to lose their reputation for reliability and solidity

  • without that, that they would struggle.

  • It has also taken some criticism for its repeated efforts to boost volumes, capture more market

  • share and lure younger buyers by making less expensive vehicles.

  • Some of Mercedes Benz efforts in lower priced segments have not exactly been successful.

  • It's a class sport.

  • Coupe was one such model introduced in 2002 and discontinued in the U.S.

  • by 2006.

  • The company has also at times found itself challenged by some formidable competition.

  • Its closest rivals or other traditional German makers, specifically BMW and Audi.

  • BMW has long cultivated a reputation for high performance vehicles, and Audi has distinguished

  • itself with forward thinking, design and an eye toward tech features.

  • But other brands have mounted a challenge, too, including Toyota's Lexus brand.

  • When Lexus was introduced in the United States in 1989, many were skeptical that a high end Toyota

  • could prove a rival to German makers.

  • But by 1991, Lexus was the top luxury import in the U.S.,

  • Going along with the perception that Mercedes is really at the top of the heap.

  • There's still also the perception that Mercedes Benz is for people who are older, that it's for

  • old money, that it's for people who have more stately tastes.

  • And there is absolutely the perception that BMW and Audi are for people who are younger, younger,

  • affluent people who want to be more sporty and dynamic.

  • The other concern is that Mercedes sport utility vehicles don't always seem to inspire the same

  • interest its larger sedans have.

  • Before the U.S. auto market shifted from mostly traditional passenger cars to SUVs, Mercedes was

  • consistently one of the top three considered brands.

  • This is largely because the C.

  • Class s class and full size E class sedans were typically popular vehicles.

  • But Mercedes has dipped a bit, in part because its dominant SUV, the glee is similar to the

  • Lexus are accurate MDX, BMW, X5, X3, or the Audi Q5.

  • In the U.S. in 2020, BMW took the top spot and sales among luxury brands with two hundred seventy

  • eight thousand seven hundred thirty two units.

  • Lexus came in second with two hundred seventy five thousand forty one.

  • Mercedes, which had been the second place brand and occasionally vied for first place, fell to

  • third with two hundred seventy four thousand nine hundred sixteen.

  • To be sure, Mercedes Benz was still the top seller of luxury vehicles globally in fiscal year

  • 2019. Mercedes Benz is then parent.

  • Daimler saw profits fall by about five dollars billion, due in part to costs from the diesel gate

  • scandal and heavy investments in electrification.

  • In twenty twenty one, Daimler spun the Mercedes Benz cars business out of the truck and van

  • business. Now Mercedes is focusing on investing very heavily in electrification.

  • Like so many other automakers, key markets like its home market in Europe, the fast growing and

  • essential market in China and even the U.S.

  • market are all pushing for electric and hybrid cars.

  • Part of their engineering excellence has come from taking their time out of doing things and trying

  • to get it right. First time.

  • And then we have our competitors like Tesla are moving more quickly on trying things that maybe

  • some of the traditional automakers wouldn't try.

  • And we have some consumers want this.

  • Not all consumers want it.

  • But there was a lot that that are interested in that younger consumers of it has to move with the

  • times, not lose on the strengths I have from may become a little more nimble and more modern

  • in the eyes of younger consumers.

  • And in that new electric car market, there are brands such as Tesla, which are already beginning

  • to distinguish themselves.

  • McKinsey's Electric Vehicle Index shows Tesla increased its global market share in twenty

  • nineteen, the most recent year available to sixteen percent of the total.

  • The largest of any one brand BMW had less than six percent and Mercedes didn't make the list.

  • Tesla and some local Chinese brands are also making headway in China, according to a report

  • from Piper Sendler.

  • The three German brands, BMW, Mercedes and Audi have historically controlled sixty percent of that

  • market. But Tesla, Li Auto and others are on the rise, and Piper's report said things are only

  • going to get worse.

  • Bottom line, the report said, whenever Tesla opens a store in a new city.

  • The Germans lose share, and there are still lots of headroom for opening new stores.

  • Of course, there are many in the auto industry who think Tesla's future is far from secure.

  • And so far, electric vehicles comprise a tiny share of total sales in the United States.

  • So what is the threat posed by new brands?

  • Definitely significant.

  • You know, Mercedes Benz obviously is still perceived as extremely prestigious and and it

  • still enjoys its very top place ranking in terms of aspiration.

  • But, you know, that can fade over time.

  • Tesla's Tesla certainly doesn't possess the sort of quality that Mercedes Benz has, but it

  • does absolutely have innovation.

  • When you have what you have upstarts like Tesla, you know, all of a sudden owning the space of

  • innovation and all that, you know, that absolutely threatens a company like a brand like

  • Mercedes Benz.

  • Mercedes has delayed the introduction of its Oecussi electric sport utility vehicle in the

  • United States for now, the company said in February.

  • But so far, plans to introduce its electric sedan in the U.S.

  • are on track. And Mercedes says it plans to make AMG versions of at least some of its electric

  • vehicle lineup, which stand a chance of being more profitable.

  • The company has also entered into the Formula E electric racing series, showing that it might

  • still well understand how great automotive reputations are made.

Mercedes Benz, it is perhaps the biggest name in luxury cars in the world.

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How Mercedes-Benz Is Losing Its Prestige Image

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    joey joey posted on 2021/04/09
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