Another Blow To Mercedes

[theveed]

Dow Jones Financial Wire 15-12-05 00:38:47
WSJ(12/15) Mercedes To Lose Luxury Crown


(From THE WALL STREET JOURNAL)
By Stephen Power

Stuttgart, Germany -- AFTER A YEAR of quality trouble, job cuts and management turnover, DaimlerChrysler AG's Mercedes-Benz division is set to suffer another indignity: losing the title of the world's best-selling premium brand.

With less than three weeks left in 2005, the auto maker is on track to cede its global premium-brand sales crown to archrival BMW AG's core BMW brand, in what would be the first year BMW has outsold Mercedes on an annual basis since 1993. In the first 11 months of 2005, Mercedes-Benz has sold 961,600 vehicles world-wide, compared with 1,020,156 for BMW-branded vehicles, according to the companies.

"Being No. 1 is what they [Mercedes officials] live for," says Christoph Sturmer, an analyst with the Frankfurt office of Global Insight, a sales-forecasting firm. "Their message is `if you want to buy the leading premium brand in the world, buy a Mercedes.' "

The shift in the two auto makers' standings is the latest illustration of broader problems at DaimlerChrysler's luxury division, and of the increasing competitiveness of the premium-car market.

DaimlerChrysler spokesmen play down the significance of losing the global sales crown to BMW, noting that Mercedes-Benz sales globally are again rising after a slow start. With four models launched in 2005 -- a record for the brand -- Mercedes officials hope to continue their momentum next year when the new version of the brand's flagship model, the S-Class sedan, goes on sale in the U.S. following a big rollout at the North American International Auto Show in January.

In the latest sign of BMW's strength, data released yesterday showed new registrations of BMW vehicles in Europe rose 9.5% in November from a year earlier. BMW has been helped by the launch of its redesigned 3 Series sedan, its top-selling model. Mercedes's new registrations -- which closely track sales -- rose a much slower 3.1%, according to the European Automobile Manufacturers Association.

While Mercedes's European market share remains unchanged this year -- at 4.6% -- the BMW brand's share has risen to 4.2% from 3.7% last year, the association said.

The European car-makers group said overall new-car registrations fell nearly 3% in November to 1,111,457 automobiles from 1,142,992 a year earlier, indicating "a stagnation of the market." Through November, overall registrations of new cars in Europe have risen less than 0.1%, to 13,486,560 from 13,479,569 during the year-earlier period. Particularly hard-hit in November: Ford Motor Co., whose registrations fell nearly 6%, and Renault SA, whose registrations fell 15.3%.

The tight sales race between Mercedes and BMW is unfolding as Toyota Motor Corp.'s Lexus division, the leading brand in the U.S. premium market, is increasingly seeking to challenge the German companies on their home turf in Europe. Although Lexus lags far behind Mercedes and BMW globally -- its world-wide sales are expected to total just less than 400,000 vehicles by year's end -- Toyota wants Lexus to become a global premium brand and is expected to let Lexus continue chipping away at the German auto makers.

Reviving Mercedes is key for DaimlerChrysler and incoming Chief Executive Officer Dieter Zetsche, who has been running Mercedes since September and is set to add the CEO job Jan. 1. Mr. Zetsche, who previously led a turnaround of the Chrysler division, took over Mercedes in September after several changes at the top of the luxury unit. His predecessor, Eckhard Cordes, ran Mercedes before resigning in July after being passed over for the CEO job that went to Mr. Zetsche.

In good times, the Mercedes Car Group -- which includes the superluxury brand Maybach and Smart, a maker of tiny premium cars -- accounts for more than half of the full company's operating profit. But for the first nine months of this year, the division has run up losses of roughly <euro>500 million, or about $596 million, partly because of quality problems at Mercedes-Benz that forced a huge recall last spring and because of mounting losses at Smart.

Under Mr. Zetsche, the Mercedes division announced plans in September to eliminate 8,500 jobs in Germany to reduce costs. At the same time, Mr. Zetsche is expected to continue to keep an eye on Chrysler, which -- though profitable and in better shape financially than General Motors Corp. and Ford -- earns far less than Japanese car makers and faces bitter price competition from GM and Ford.

So far this year, Mercedes's sales in the U.S. are down 0.9%, while BMW sales have risen 2%. Within Germany, the loss of Mercedes's top global sales status is seen by some as another sign of how the brand has stumbled in recent years.


(END) Dow Jones Newswires

[kimpOy]

dami kasing bumili ng X5 eh

[wilcats]

kahit dito ang dami ko nkikitang 3/5 series na bag0 eh and some 7 series.. bihira lng ang bagong Benz na E class..(un C luma narin kse) CLS wla pako nakita

[Bry]

I always preferred BMWs than Mercs. Hehehe.

[basti08]

with the recent disaster in the launching of the S-class (re: failed laser guided cruise control)...expect their ranking to plunge even lower in the next charts.

btw, nagloko nga daw pala yun kasi nasa steel testing grounds sila...
di kaya magloko rin yan mga yan dito pag minaneho sa likod ng owner type jeep?
:LOLz:

[empy]

yay BM!

it's amazing to me that BMW is still gaining ground in spite of all the ugly-ass (imo) designs that they are producing. that means that people still like the designs/brand/features of the cars even though i hate the designs and thought everybody else did too.

i guess the world doesn't revolve around me after all

[Bry]

I really don't get it why some people hate the new BMW (bangle-ized) designs. IMHO it's much better than before.

[BlueBimmer]

not ugly, but very plain looking. the new 3 series looks very very plain inside and out. but its still the best 3 series with the E46 just inches behind it.

[ILuvDetailing]

kanya kanyang taste lang yan, its really subjective if you ask me. For me I like the 3 series but I hate the 7 series style wise. So don't hate me for my point of view

[BlueBimmer]

haters stay away