Date registered: Dec 2004
Vehicle: 300TE 4-Matic 300GD
Location: Oslo Norway
Mentioned: 0 Post(s)
Quoted: 0 Post(s)
RE: WHy are MBs expensive outside of the US ??
"I am curious why Mercedes are cheaper in the US compared to the rest of the world "
The reason is simple. Market mechanism. Please let me explain.
If we compare a single bus owner with Daimler Benz as an example, and pretend that the number of seats represent production capacity, it's easy to see why.
We can say the bus owner is offered a route and one bus, but he can use any size of bus and the fare he chooses. For DB the world is the route, the bus is factories, fare is car price. One can throw in a lot of parameters, but here we deal with three.
Before the trafic commences, he might choose a 41 seater and plan on a dollar a seat, but finds he can attract only 8 regular passengers. If he needs 30 dollars to break even, he would have to increase the fare to 4 dollars. But that might bring it down to 6 passengers.
So he starts to divide the seats into S-seats, G-seats, E-seats, C-seats, and so on. After a while he has stabilized the business and make a small profit. But he passes a lot of potential passengers every day. And he does have plenty empty seats, which requires very little extra cost to fill. So he offers US-S-seats, US-G-seats and so on. If we say the seat wear, diesel use, and maybe insurance cost might be 8 cents, he could charge a dollar for one of those seats and the margins are just great. Of course the US-S-seat needs fresh coffee and newspapers and stuff, but as long as the base cost is 8 cents, it will never touch the normal S-seat price.
For DB, unused production capacity is very expensive. So whenever they flood a market and meet stagnation, they will have passed the break even point anyway. Some markets are less willing to pay up, some don't have the dough in the first place, while some are just not interesting markets at all.
In Norway, for example, we can't buy as many SLR's as we like. Or S-class cars. The prices are thereafter. 4-Matics were almost non-existant before the used car import wave started in 95-96, after the Germans were finished with them.
The American market has it all. From the most outragous customers, to the most modest. But to be able to hold American market shares, you have to price accordingly.