Weak dollar and quality problems catch up. I am not surprised by the effect of the latter given how much work my dealer has performed on my car under warranty. There is no way you can be profitable bearing that kind of costs. I do expect some tightening of their liberal warranty policies as part of their cost-cutting measures before the quality improves to make that unnecessary.
http://biz.yahoo.com/ap/050210/earns_germany_daimlerchrysler_3.htmlOperating profits at Mercedes, hit by quality problems and the weak dollar, plummeted to just 20 million euros ($27 million) from 784 million euros in the fourth quarter of 2003. Fourth-quarter sales at the luxury division fell 2 percent to 12.8 billion euros ($17.4 billion) from 13 billion euros a year earlier.
Chief Executive Juergen Schrempp emphasized the company's dissatisfaction with the state of affairs at Mercedes, and proposed a "road map" for how it intends to improve the division's performance by 2007, including a comprehensive quality offensive and a focus on cutting costs. The company didn't rule out job cuts at the division.
"One thing is quite clear: even without the exchange-rate effects, the operating profit of the Mercedes Car Group in the third and fourth quarters would have been unacceptable," Schrempp said.