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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.

Operating 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.
http://biz.yahoo.com/ap/050210/earns_germany_daimlerchrysler_3.html
 

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I'm surprised this wasn't posted by Linh! haha

I'm also not surprised that they're having trouble. I heard that they've ended their "super-car" relationship with McLaren as well. With 2 cars already designed and prototyped? I wonder if this will affect their F1 relationship?
 

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Actually, according to GAAP - warranty repair expense should've been posted to the year vehicle was manufactured, so current quarter report wouldn't show that. Unless it's specially noted under "special items&one-time charges"

Don't take it as 100% truth - i got "B" for accounting class. ;)
 

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Remember what happened to Yugo...well Mercedes is going down the same path unless they figure out how to get the quality back. What they need is a 10 year 100,000 bumper to bumper warranty to get me to buy a new SL 500 for $95,000.
 

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Kidzdoc - 2/11/2005 2:28 AM

Remember what happened to Yugo...well Mercedes is going down the same path unless they figure out how to get the quality back. What they need is a 10 year 100,000 bumper to bumper warranty to get me to buy a new SL 500 for $95,000.
But Yugo started at a much lower level so I don't think that is the path for MB. Most people buy MBs because it is a MB and then bitch about it of there are problems. Yugo didn't have that luxury.

Don't expect generous warranties from MB any time soon. If you look at sales numbers, they haven't changed appreciably (albeit no growth either which in itself is bad). What has happened is that their margins have plunged and largely because of the costs associated with production and the quality issues.

Since their sales numbers aren't suffering (yet), they will not increase the warranty but in the short-term tighten it a bit to control costs while they start putting things in place to get the quality problems under control. When they reach a level where the warranty costs become manageable with less quality issues, they can become more generous with warranties to attract more sales and to get some lost customers back. Increasing warranty to keep repairing cars for longer is suicidal for for MB at this time.

They have no choice but to ensure people don't keep coming in for warranty repairs.

They could copy a thing or two from Lexus in this matter. [:D]
 

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True, Yugo started much lower in status than mb but mb also caters to a more demmanding customer than yugo. And the whole chrylser thing didn't do them any favors in building a reputation. While this is anidodotical, where I work is pretty affluent, the ppl I work with drive luxury cars and when we have grand rounds cars inadvertantly came up and a single person was happy with their mb, out of 30 ppl, give or take. We drive almost every variety of mb made in my department from the slk to the g. btw the g driver was the only one happy with it. Most of us replace auto's every few years and not one of us discussed getting another mb.
I personally think there old reputation only compounds the problem. MB still expects top dollar for their product, and as a consumer I am willing to pay it under the assumption its a reliable, well designed car. Unfortunately that is not what you get. What im trying to say in a muddled way is if I bought a yugo for 9k I would expect it to have flaws, break down etc. MB ,which is easily 7-9x that cost I would not. Of course im realistic I can understand the very rare breakdown, but mb's breakdown much more regularly than rarely, in fact my slk has broken down more than my toyota, bmw, and saturn did COMBINED. Its unfortunate really, I am still young (30yo) and will have many cars in the future and I highly doubt they will wear the star. I guess mb has a choice to make, either start producing cars that are comperable to the price they are charging, or charge what the current cars are worth so they are cheaper than the cost of camry.
Don't forget either that ppl that are unhappy with a product talk about it 10 times more to others than ppl that are happy w/them. I have more than once strongly urged friends not to even bother looking at mb since they are riding on their name nowadays.
 

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Miked619 - 2/11/2005 11:05 AM
I guess mb has a choice to make, either start producing cars that are comperable to the price they are charging, or charge what the current cars are worth so they are cheaper than the cost of camry.
Do you really think that? I drove a camry..... My benz is MUCH better built and a hell of a lot nicer. My car feels solid. The camry is made frok crap and rides like it.
 

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Well in some respects yeah I really do. MB may feel more solid but, in my experience so far its reliablity so far detracts from the great looks of the car it brings it down, way down. Don't get me wrong I love the styling and looks of the benz's but it reminds me of an old jag, looks super hot but was plagued with electrical problems. And just like an old jag I love to look at them but would never own one.
Sorry to say but mb imho isnt near its supposed rivals such as audi, bmw, porsche, or lexus. I have been test driving auto's that may replace the slk and the one thing thats holding me back (besides taxes due, but lets not go there) is the look of the slk, I love the look and the hardtop. But after driving the boxster s, and even the m roadster it was clear to me which car was superior. Yeah you could say try a 32, but a 32 isnt in the same price range. You would need to go to a carrera for a somewhat fair comparison, and thats no comparison. I think my last experience w/service about sums it up for me when I have to call the service shop because the loaner car broke down, while mine was in the shop for repairs[xx(]

Maybe a better comparison would be a vw then, like a passat level.
 

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Miked 619:

Just curious what year your SLK is and did you buy it new, used, Starmark or not, and the mileage, if any, on it when you started driving it.
 

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YellowSLK230 - 2/11/2005 1:31 PM

Miked 619:

Just curious what year your SLK is and did you buy it new, used, Starmark or not, and the mileage, if any, on it when you started driving it.
bought it 15months ago now, w/a starmark warranty. when I bought it there was 25k miles

my coworker that I know most about her car cause she somehow suckered me into helping her with is a ml430 that she bought new and has 57k miles on it. Im not gonna list all the things I have replaced on her car either, but lets just leave it at its shown me that its more across the board issues. Also one of my coworkers brought for his wife a brand new e55 or s55 dont recall off hand which it was, do remember the 55 part though, lol. Anyway she called hysterical because the car died in the middle of the road while she was turning, it was a week old. Anyway im done w/neg stuff for the day :) I enjoy driving the slk, just putting out there my view/understanding why their profits dropped so drastically.
 

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What's really interesting is all of this is largely perception based on personal experience. I know BMW owners who curse the day they bought their cars; heck, even Range Rovers for all their stature and pedigree are known for their own fair share or problems. Even Ferraris and Lambo's - talk to people who own these monsters and you'll hear the same rhetoric. Granted Hondas and some other Japanese marques have made a name for themselves on quality, just like MB and BMW did so many years ago. I guess they got soft and tried to compete on the same level as these younger companies; but guess what - people expected more from them than they did from the smaller guys so even though MB made seemingly more affordable cars, quality suffered and now they are like, Damn it! we should have stayed with the original script eg CLS 500! But it's all business, and personally I have not had most of the problems I have read on this forum (I am at 60k miles with my 99 SLK - maybe I am overdue for my share of headaches). A few bulbs went out, the interior door panel came unglued but replaced under warranty; canholders malfunctioned also replaced under warranty. I still have the C-pillar rub spot and thankfully it has not gotten worse, just a mere dot of a chip. I can live with that, besides a good wax job takes care of it anyway so why sweat it. That would be like losing sleep over some wear and tear from rock chipping that the front hood of every car is exposed to. The more money spent the greater the expectation of satisfaction; this works for cars as well as people, we expect to get our money's worth and that is not too much to ask.
 

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It all started when MB began to compete with Lexus. They over gadefied their cars and now they're paying the price. But then again, they are selling more cars now than when they were building super solid over engineered tanks.

They have already started the retreat. On the E class they have started to decontent some of the electronic do dads to try and up percieved quality. Plus they're saving money because they don't give a discount for less features.
 
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