By on December 18, 2012

The S-Class Mercedes has been the default choice for the global taste-and-wealth set for a very long time, probably since the demise of the Elwood Engel Continental. The 7-Series BMW, by contrast, has always been a slightly embarrassing purchase, the choice of the man cut out from the classy club by birth, ignorance, or a slightly unseemly insistence on driving dynamics. BMW is the striver’s brand, launched into the spotlight by a man who was sort of the Nadia Comaneci of sweaty social climbing. Mercedes is the real thing. Hasn’t it ever been thus?

German investors, on the other hand, seem to like the Roundel.

An article published by Bloomberg late last week seems to suggest that the bloom is off the Daimler-Benz rose, and a large part of that is due to the infamous Dr. Z:

BMW’s market capitalization has surged to 45 billion euros ($58.8 billion), versus 42.2 billion for Daimler. Subtract a reasonable price for Daimler’s truck business — the world’s biggest — and the value investors assign to Mercedes stands at about 25 billion euros.

“The market is saying that the prospects for Mercedes are much worse than for BMW,” said Hans-Peter Wodniok, an analyst with Fairesearch in Kronberg, Germany. “The market’s always right. In terms of innovation, BMW is the leader.”

“The market’s confidence in Daimler management is pretty much at rock bottom,” said Max Warburton, a Bernstein analyst in Singapore. “Investors have little or no confidence that current management will be able to do what is necessary to close the gap to BMW.”

One would think that the time to have lost confidence in Daimler management would have been a decade ago, when the product was iffy at best and even the mighty S-Class was often seen driving around with a dead COMAND screen and a droopy air suspension. Sometimes perception lags reality. Not to worry, though: investors may be bearish on the three-pointed star but there’s redemption ahead.

the potential of the Mercedes brand in China is “ overwhelming,” said Yale Zhang, managing director of consultancy Automotive Foresight in Shanghai. “Every consumer understands the value of Mercedes and the logo.

While the S-Class no doubt reigns supreme in China as elsewhere, the relatively lackluster star quality of the C-Class probably has customers there wondering if they really wouldn’t rather have a Buick.

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38 Comments on “BMW Pulls Ahead With Investors...”


  • avatar
    blowfish

    One would think that the time to have lost confidence in Daimler management would have been a decade ago, when the product was iffy at best and even the mighty S-Class was often seen driving around with a dead COMAND screen and a droopy air suspension. Sometimes perception lags reality.

    hear say Circa 10 yrs ago Merc had some serious quality issues, she was trying to fight battle on every front, honey moon period with cryslur was slowly getting over, quality dropped, trying to be all things to all people A,B,C,E,G, M, R, S and maybach classes.

    some said maybach’s down fall was not a owner driver machine even it can almost out run a mustang in 0-60. and also built on a s platform and on the same production line. almost like the same kid flipped a chee burger and doing your $100 steak 5 mins later.
    sales of S klasse in middle kingdom was not happening as some post suggested here. maybe her sports cars are doing well.

  • avatar
    racer-esq.

    The best looking car in that picture is made by neither BMW nor Mercedes. But it is probably about to be taken out of the race by a suspension failure.

    The S-class is prestigious because it says: “You know all those cool, desirable cars that poor and middle class kids dream of owning when they grow up? Well, I was never poor or middle class, so I drive an S-class instead.”

    • 0 avatar
      Detroit-Iron

      Are Audi touring cars AWD?

      • 0 avatar
        CJinSD

        No. DTM is now a spec series to an even greater degree than NASCAR. They all run the same chassis, the same engine, the same brakes, and I think even the same windshield. The roof panels and lights are the only factory parts.

    • 0 avatar
      Manic

      @CJ
      “identical assembly components are now used in all performance relevant areas of the DTM. These parts are limited to around 50 items which account for about five per cent of all components. So, the freedom of development which the premium car manufacturers still enjoy in the areas of aerodynamics, the suspension and the engine is large enough for them to clearly retain unique features.” Lesser degree than NASCAR, IMO.

      http://www.dtm.com/en/Technical-Regulations.html

  • avatar
    CJinSD

    Four years ago, you couldn’t drive a block in Pacific Beach without seeing at least two E90s. These days, all the twenty-somethings are driving new C-class Mercedes instead. I also see lots of AMG CLs and SLs in the choice valet spots at nice restaurants in La Jolla and Del Mar. I’d have thought they were doing pretty well, even if the latest funny looking CUVs from Mercedes are thin on the ground. This isn’t China, but Southern California is a pretty important market for imported luxury cars.

  • avatar
    Spartan

    Not surprising at all. BMWs are IMO, better than MB especially in the meat of the luxury market, the SUVs and sport sedans/midsizers.

    I’m not BMW fan by far, but I’ll take a 3er, 5er, and X5 all day over a C, E, or ML.

    • 0 avatar
      genuineleather

      It’s a matter of taste, of course, but from midsize on up Mercedes outsells BMW in virtually every category. There’s a reason the E350 is the rich man’s Camry.

    • 0 avatar
      NMGOM

      Spartan…

      I am a BMW fan, as you can see from my avatar. But not fanatically so.
      In fact, my dealer is a joint BMW/Mercedes dealer, and I get to drive both types of cars in various events throughout the year, for charity mostly.

      Yes, this is a Nip-N’-Tuck race, but almost invariably the BMW just has that little “sparkle” (for want of a better term); and the MB seems more stodgy and anesthetized. Both have fine interiors; both have good reputations. But BMW does lead in innovation and state-of-the-art technologies, often to its own detriment: but they do manage to cycle a bit and eventually get it right, placing the BMW marque way out in front (“iDrive” is a good example). That is what, IMHO, is an investor-quality characteristic.

      My disappointment with BMW is its foregoing of its former enthusiast base by gradually eliminating the manual-transmission option from many cars. But, then again, the whole industry seems to be going that way, even Ferrari. So, thank God for some American cars: Corvette, Buick, Cadillac, Mustang, and Camaro come to mind. And who knows, maybe a Cadillac will eventually be a new MB replacement on the world stage?

      ————–

      • 0 avatar
        niky

        Ten years ago? I have a relative with a four year old S-Class with a busted air suspension…

      • 0 avatar
        genuineleather

        “BMW does lead in innovation and state-of-the-art technologies”

        That’s a bit of a leap. BMW gave us IDrive and flame surfacing; Mercedes gave us the first supercharged passenger car, the first diesel, crumple zones, ABS, seven-speed transmissions, and adaptive cruise control.

      • 0 avatar
        Morea

        BMW came out with the first magnesium engine block (actually an aluminum core with a magnesium casting around it.) This is a significant technological leap. The block is both stiffer and lighter than the previous all-aluminum one.

  • avatar
    genuineleather

    As a diehard Mercedes fan, it pains me to agree, but the points made are valid. Since the Schrempp era, management has frittered away tens of billions of dollars on:

    Chrysler (Look ma, I can pay $40 billion and flip for $7 billion!)
    Mitsubishi
    Smart
    Maybach

    The biggest problem, though, is that they’re competing with BMW and Audi at all. In the 80′s, a Mercedes cost 30-40% more than an equivalent luxury car; people paid it because the cars were worth it. Today, MB costs no more than the competition, but it isn’t any better than it either.

    Signed,
    R129 owner, formerly W123, W124

    • 0 avatar
      tatracitroensaab

      It’s really a shame that Mercedes surrendered the ultra premium market, as that’s where things are headed. They need to go further upmarket – German luxury vehicles are increasingly ubiquitous and rich people are buying things in this new ultra luxury segment – see panamera, Maserati, etc. BMW knows this — that’s why their new 6 series gran coupe is so expensive. Mercedes needs to go there – the profits could be huge.

      I have a hope, but the chances of it occurring are nil — I think that Mercedes should go for ultra luxury that’s understated – like the Mercedes of old. Honestly all the other luxury cars are blingy and sporty, and if they go in a different direction, they could seize the niche and own the market when the tides change. Part of me realizes that this is a wet dream and that rich people are just blingy and gross these days, but part of me hopes that My cynicism is unfounded and that people would be classy, not klassy, if they had an option

      • 0 avatar
        genuineleather

        There will be a “Pullman” version of the 2014 S-Class, fully kitted out on an extended wheelbase that’ll sell for Bentley money. I am cautiously optimistic that it’s a step in the right direction.

      • 0 avatar
        CoreyDL

        Yes yes!

        http://www.caranddriver.com/photos-12q3/463495/2015-mercedes-benz-s-class-pullman-artists-rendering-photo-463496

  • avatar
    philadlj

    Also significant: Daimler currently has no answer for BMW’s entry-premium MINI division. No, Smart doesn’t count (snicker).

  • avatar
    cognoscenti

    Former W203 owner here (C32 AMG to the unwashed, heh). I threw thousands of dollars at it in an effort to make it handle like the BMWs that preceded it in my garage. Finally, I had to give up and go back to BMW. That experience, combined with multiple, comically ridiculous and expensive dealership maintenance visits, was enough to make me swear off the three-pointed star for good.

    • 0 avatar
      MBella

      Although I like the way the W203 handles, I will admit that the C32 didn’t have enough of a suspension upgrade compared to the standard cars I will say that every 325i of the same vintage that I have driven has been disappointing for the ultimate drivin machine compared to a C320. I do assume however that an M3, which the C32 is theoretically a competitor to handles better. I also would like to drive a new M3 because I cannot fault the C63 in any dynamic that I can feel. The 156 and 157 AMG engines are absolutely brutal.

  • avatar
    wsn

    The demise of MB was not brought by BMW, even though they are both German.

  • avatar
    el scotto

    3 series and C classes are almost mandatory for the promotion that gets you into the $1200 suit club. I’ve spent way too much time in Washington D.C.

  • avatar
    PintoFan

    Both BMW and Mercedes are headed for a reckoning in the United States. It’s not that they will disappear; it’s that they will simply cease to be thought of as premium brands, due to their sheer ubiquity and the democratization of “luxury” features. The erosion of pricing power is already apparent at both marques.

    • 0 avatar
      hubcap

      I really thought Acura and Infiniti would give BMW a go but that was not meant to be. When you look at the Legend, and what that car represented and compare it to the RLX, and all it stands for, the drop off is clear.

      I still believe that Acura can make a run but they’ve got to get serious.

      As far as the two German visigoths are concerned… I’ve always been a BMW fan. I can find a vehicle in each segment that I’d put in my garage. Can’t say the same about Mercedes.

  • avatar
    Dimwit

    Both marques were considered aspirational brands. It showed that you had class and taste plus money when you drove one of those. Times have changed and the companies have watered down the brand too much.

    So B&B, if you won the lottery tomorrow, what would you buy in a sedan that showed the world that you’ve “made it”? I can’t think of anything right now that’s properly aspirational. Lexus? Bentley? RR? What would a man of breeding and taste drive?

    • 0 avatar
      PrincipalDan

      I’d get a Lexus LS but then I don’t think I need to prove anything. Then I’d get a lots of cars for the hell of it. Smokey and the Bandit Trans Am, Cadillac Fleetwood Talisman, 60s Mustang, 77 Town Car, 60s Imperial… etc. That way whatever happened with the fun cars, the Lexus would always be there to drive.

    • 0 avatar
      WaftableTorque

      Luxury car brands strike me as a future MBA case study in brand extensions. Most luxury brand categories aren’t capable of spanning a large price differential. Ralph Lauren can’t sell Chaps for very much, but he can with Purple label. You can’t charge thousands for AX, but you can for Armani.

      I think that premium buyers are able to differentiate between a Mercedes SLS and an A-Class, the same way Tiffany can sell a $200 charm bracelet and a $1 million diamond solitaire in the same store. The difference is in the eye of the consumer: the affluent buyer goes to a high end store to save time, whereas the aspirational buyer goes to treat themselves and for conspicuous signaling.

      The brand to watch is Hyundai: if they can market the Equus and Genesis beyond the halo effect into an aspirational luxury good, that would upend years of marketing dogma.

      • 0 avatar
        krhodes1

        This seems to be a uniquely American point of view.

        In Europe, BMW sells everything from a 1.6l stripper hatchback 116i to the mightiest V12 7-series, and people still aspire to own that 1.6l hatch over a same priced 2.0l with far more equipment from Opel or Renault. But selling such a car in the States “dilutes the brand”. Ditto Mercedes – from poverty-spec A-class to plutocrat S-class, and nobody bats an eye. God-forbid the wailing and nashing if they ever tried to sell a cheaper car here.

    • 0 avatar
      krhodes1

      @dimwit

      I would drive the same car I currently drive, and for the same reasons. BMW 328i wagon. I bought it because it is a GREAT car to drive, and it was literally the only car on the market that had what I wanted – RWD, manual transmission, station wagon, and I did not need 500+ hp, much as I also like the CTS-V wagon. I don’t do sedans. I do admit that if I won the lottery I would probably trade my beater Jeep Grand Cherokee for a nicely kept older Range Rover. But I might do that anyway at some point.

      I have no need to show anyone I have “made it” other than myself.

    • 0 avatar
      wsn

      I don’t think anyone “made it” by winning a lottery. If I win, to prevent embarrassment, I would be as subtle as possible, so that no one look at my nice car and ask what do I do for a living.

      So, if I have $1M net from a lottery win, the best car for me would be a new Camry.

      If I earned it, it would be a Lexus GS. Rare enough, reliable enough, and not exceedingly expensive.

      • 0 avatar
        stuki

        The way most wealthy people seem to make their money these days is in finance. And the only difference between making money by being good at picking subprime portfolios and picking lottery numbers, is that in the former case, you risk losing your investment if you pick wrong, while in the latter, everyone else get to pick up the tab.

  • avatar
    Junebug

    Unless I won the lottery, I’ll never play in this sandbox. I do get to detail a bunch of these and talk to the owners. The MB 500 SL 4matic that my dentist use to have was (I thought) a great car, he said it was an expensive money pit and now has a BMW X5 diesel. Oh well..

  • avatar
    oldyak

    as the owner of two older BMW`s I can only say that they are distinctive and awesome road cars.
    I wanted a BMW since I was young.
    Reading Car and Driver and Road and Track,and getting a ride in a new 2002 in high school solidified my desire.
    I cannot afford a new one and that’s OK.
    My point is….what was Mercedes doing for the enthusiast back then?
    They had their chance many times over…….

    • 0 avatar
      krhodes1

      I’ve owned Mercedes and I have owned and currently own a BMW. They have historically been VERY different cars, with very different appeal. My ’88 300TE was probably the most rational, sensible, capable car I have ever owned. It would do everything from carry a fully assembled snowblower on a shipping pallet to cruising effortlessly at 120mph to ripping up a twisty back road. But it wasn’t ‘fun’. ALL of the BMWs have been fun. Mercedes just doesn’t do fun the way BMW does. A BMW is always goading you on to go faster. A Mercedes will go as fast as you want, but it doesn’t encourage it. The rational choice, not the enthusiast choice.

      All that being said – back in the day I found Peugeots to be a wonderful blend of both, with better seats and ride than either. Much better steering too, until the Germans figured out rack and pinions.

    • 0 avatar
      CoreyDL

      I’m thinking the first “enthusiast” model was the 190E 2.8 Cosworth.


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