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Fellow Benzers,

Read what Peter DeLorenzo had to say about Mercedes-Benz on his website this week (http://www.autoextremist.com. Interesting - and alarming - reading indeed. (I'm quoting the whole piece below:)

"Mercedes-Benz.
"Lost in the relentless media drumbeat of GM's bad news of late is the fact that DaimlerChrysler AG's Mercedes-Benz division continues its inexorable death spiral into becoming an also-ran luxury brand. Last Thursday, Mercedes announced a massive recall of 1.3 million cars worldwide to fix electrical and brake system flaws, which exposes M-B's recent statements to the press that their quality problems are "over" as nothing more than wishful thinking, at best. Involved are Mercedes-Benz E-Class and CLS models built between January 2002 and January 2005, which will need to have battery-control software replaced to correct reoccurring power interruptions. Other cars involved are E, SL and CLS models built from June 2001 until March, which will receive upgrades to their braking systems. DaimlerChrysler AG CEO Juergen Schrempp declared that M-B quality problems were "over" as recently as last month, and Eckhard Cordes, the new CEO of the Mercedes Car Group, echoed those comments even more emphatically, calling Mercedes-Benz quality the "best ever." We've said it before, and we'll say it again - the current Mercedes-Benz management regime is responsible for squandering the bullet-proof reputation of one of the most revered luxury brands in the world, a brand reputation based on engineering excellence and technical brilliance that was over 100 years in the making. No management group in automotive history has done less with more than Juergen Schrempp and his team. BMW, Toyota (Lexus), and now even Cadillac and Audi are hammering heretofore unassailable Mercedes-Benz from all sides and on all fronts. The "buzz" on the Mercedes-Benz brand on the street is so bad now that even the sales pros in the trenches are taking note of it at the dealer level. Mercedes' disastrous move down market in the U.S., combined with its equally disastrous quality performance, has dragged the brand down to not only being just another car company fighting for an ever-shrinking slice of the pie, but it's rapidly becoming a second-tier luxury brand after enjoying its rarefied place at the top of the U.S. market for years. Mercedes-Benz simply isn't hot any more and yet here is Juergen Schrempp blithely cruising along saying everything will be fine and that Mercedes will return to its rightful place at the top of the automotive food chain. Well, it's notgonnahappen.com, Juergen. And you and the entire board of management that has stubbornly kept you in place, even extending your contract, are ultimately to blame. Because any other executive at any other car company responsible for one of the biggest brand collapses in automotive history would have been shown the door years ago. Keep watching this space, folks, because we are witnessing the self-destruction of one of the most famous brands in the world right before our eyes - and we'll be reporting it every excruciating step of the way."
 

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Good article

I just read something similar on Deutsche Welle. Note the section that explains on why there are electrical problems.

DaimlerChrysler chief Schrempp is likely to get more than an earful at this year's shareholder meeting. The company, say analysts, has never been more unstable.

Trips to the annual shareholders meeting are never much fun for DaimlerChrysler CEO Jürgen Schrempp.

But with his company in a serious downward spiral of late, the meeting on Wednesday should be especially agonizing. DaimlerChrysler's operating profit has dropped, its expansion strategy in Asia faltered and, at the beginning of the month, the Mercedes division announced the biggest recall of cars in its history.

The slip-ups will not only draw the ire of smaller shareholders this year, but the massive investment funds that hold as much as 10 percent of DaimlerChrysler's 1 billion shares. Union Investment, which holds 15 million shares, drew up a list of complaints ahead of the meeting.


Shadow over the brand
Among them, that DaimlerChrysler top management has had to regularly revise its profit expectations in recent years and that their profit predictions for 2005 to 2007 have been too inexact. The fund also targeted the recall of 1.3 million Mercedes built in the last four years, which began on April 2.

"The shoddy quality of the cars throws a shadow over the value of the brand in the long run," Union Investment wrote, according to reports.

Schrempp admitted as much in an interview with Der Spiegel newmagazine ahead of Wednesday's meeting. The company made a mistake by outsourcing the entire electronic components for their navigation and motor management systems, said Schrempp. As he drove around Stuttgart one day, the navigation system kept asking him to turn.


"By the third time, I realized that it wasn't my fault," he said in the interview.
"The discussion about quality," he said later, "is not good for Mercedes."


Division is Smart-ing
Neither is the money-losing Smart brand. Though the two-seat half-size cars made a splash upon being introduced in 1998, they haven't sold as well as anticipated. The introduction of new models in recent years has failed to lift sales.

After admitting losses of 2.6 billion euros ($3.3 billion) on Smart, Schrempp and his board announced a 1.2 billion euro restructuring program that will cut jobs and stop the introduction of further models.

That likely won't stanch the cascade of criticism and uneasiness among shareholders -- especially with an ongoing investigation by German prosecutors into several DaimlerChrysler employees accused of misusing company resources.

Last year, Schrempp's management team won approval of 88.49 percent of its investors, around 10 percent less than the year before. Shareholders of companies in Germany traditionally ratify a management's actions over the previous year. An investor only rarely refuses to give management approval.

Approval rating to sink
But this time around, the number of angry shareholders will only increase. Union Investment Fund has flat out announced it will not give the management its vote of confidence. Analysts say the fund management company SEB Invest and Germany's largest fund company, DWS Investment, will also likely withhold their approval.

"Daimler has repeatedly disappointed over several years," said Thomas Körfgen, the head of equity funds at SEB. "Every year, there's another division with a catastrophic development."

DW staff (dre)Your text hereYour text here
 

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DeLorenzo does neglect to mention that MB has just appointed Rainer Schmueckle as its first-ever Chief Operating Officer, who will "be responsible for the functional divisions of production, procurement and information technology within the Mercedes Car Group."

We'll see if Schmueckle will be able to make a significant difference in the current quality level, but at least Mercedes is shuffling the board of executives which DeLorenzo so hotly criticizes.
 

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Am I missing something here?
My impression of what MB is saying is that the quality issues addressed in the recall were issues that have been corrected on what they are building now and the recall is to bring the vehicles already sold up to the same revision level or standard.
Since these are not changes that would require a formal government mandated safety recall it is interesting that MB would eat the cost of this considering their current finantial outlook. The Chrysler of the past, or for that matter GM or Ford would never publicly admit to problems like this let alone offer to fix them for free.
 

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n5160u - 4/8/2005 2:32 PM

Am I missing something here?
My impression of what MB is saying is that the quality issues addressed in the recall were issues that have been corrected on what they are building now and the recall is to bring the vehicles already sold up to the same revision level or standard.
Since these are not changes that would require a formal government mandated safety recall it is interesting that MB would eat the cost of this considering their current finantial outlook. The Chrysler of the past, or for that matter GM or Ford would never publicly admit to problems like this let alone offer to fix them for free.
Maybe Mercedes execs assumed that the cost of performing the recall voluntarily would be far less than the cost of waiting until the recall was government-mandated and then having to perform the recall anyways, but at an even greater expense to their public image.
 
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