Daimler In Trouble – And It Will Get Worse
A few months ago, we discussed what Nissan/Renault’s Carlos Ghosn calls a “structural decline” of Europe: Missing car buyers, brought on by a sudden decline of births around 1970. A population peak that now sits smack in the middle of the prime new car buying age, which in most of Europe is between 40 and 60 years, will retire in a few years, throwing Europe’s car industry in turmoil. Daimler, which has some of the oldest buyers, is beginning to feel the pain.
Daimler told Reuters and its shareholders that it might cut its 2013 profit expectations this month, which many analysts had not bought in the first place.
“Not much tailwind is anticipated from the markets in the coming months. For Europe in particular, there are no signs of a trend reversal,” said Daimler CEO Dieter Zetsche. Eroding sales in Europe and problems in China, paired with institutional arrogance, made Daimler fall far behind rivals Audi and BMW.
At the cheap end of the spectrum, Fiat CEO Sergio Marchionne said the company’s losses in Europe could be worse than expected this year.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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Getting back to the topic of what ails Daimler in general and Mercedes-Benz in particular: I've owned 7 different Mercedes-Benz. One was a 1995 E320 Coupe. Presently my wife drives a 2010 GLK350 and the other day I was given a 2012 C250 as a service loaner while it was in for routine maintenance. Enough said. I too will retire in a few years and have considered that the maintenace costs of a Mercedes-Benz may be a deciding factor in my choosing another make. Two days in the C250 cinched that decision unless something changes drastically.
Speaking of retirement, despite being far away, I was a controller at a company that went through a massive downsizing and did it by seniority, towards the end of my employment I was amazed at the number of people (making $80-$120k) ten or less years from retirement getting rid of thier $40-$60k cars and especially trucks and suvs, for ford focuses and such (price range classes of vehicles). Makes Mulally's demand and crusade (while SAARS was still at 18MM) to switch Ford from a company that sold cars at a loss to cover cafe to a company that was going to live or die by them, that is what the future holds, especially for those who are that close to retirement and got hammered in 2007, that loss will never be recovered completely and the realization that they are going to have $1k+ month less than they thought won't drive sales buy what sales. Based on that same principle is it worth it for Ford to rebuild lincoln vs. making it the new mercury? Institutional Arrogance...I worked with a man who was a VP in powertrain at Chryco during that merger, At the first high level exec meetings the Germans rolled up in thier limos they had flown over, the chryco people car pooled in minivans, they called it Daimler-Chrysler, the Germans called Chryco business unit 28, wonder how that managed to fail.
Already blew through that Chrysler money, Daimler?
institutional arrogance - yep, seen that too! 30 years ago I started working for a little electronics company, it hired a fat ass from Texas with the attitude to match and pretty soon our 28 dollar a share stock was worth a buck! Naturally, he and his minions golden parachuted out and we got bought/sold twice before getting picked up by a big corp that knows a thing or three about business. Me? I am the lowest nut on the scrotem pole so I've survived, kept my mouth shut and worked like a mad man and they left me alone. Now, I have 30 years in and only 12 more before I go fishing, can't help but pray every night that I survive to enjoy retirement - so close, but not close enough.