By on March 11, 2010


BMW and Daimler don’t really like each other. As Herr Baron Schmitt put it, “Daimler engineers view their colleagues as boorish Bavarian upstarts. BMW engineers think Daimler is a congregation of has-beens”. Bluntly speaking, there’s no love lost between them. Which makes the following news that much sweeter to the “Bavarian upstarts”. And which makes the has-beens gnash their teeth.

While Daimler reports a €2.6 billion loss and a no dividend for the year, BMW is announcing increased sales. The State (of South Carolina, where BMW has a plant) reports that BMW’s global sales have increased 14 percent. BMW said that it sold 91,758 BMW, Mini and Rolls-Royce vehicles during February 2010 compared to 80,474 in February 2009. “After a substantial increase in January, sales year-on-year were significantly higher as well in February,” said Ian Robertson, member of the Board of Management of BMW AG responsible for sales and marketing, “Last month we saw growth in Asia, in particular, but we also made gains in many markets in Europe, Africa and the Americas. In key sales markets such as the U.S., the automotive sector is also showing encouraging signs of a gradual recovery.”

Whilst BMW branded vehicles grew 16.3 percent in the United States, in China, they rocketed up 96.7 percent during the month of February. Bubble or not, BMW are delighted with that news. There was also good news for the UK export figures (which had been poor of recent) with global Mini sales growing 16 percent (YOY). Lastly, Rolls Royce branded cars were up 48.1 percent to 154 units (previous year 67 units). Given BMW’s size and the shrinking of the luxury car segment, BMW’s figures are impressive. Not that will come as much comfort to Daimler.

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43 Comments on “BMW: Breaking Daimler’s Will...”


  • avatar
    BMWfan

    I would not count out Diamler just yet. I have not driven the new 350 as of yet, but I hear it’s a great car. Unfortunately, Mercedes had let quality slip over the last several years, and it caught up with them. I never understood why a company would work so hard to create a great image, and then waste it by producing an inferior product (ML 350 anyone?). Once the beancounters influence the designers too much, the company is bound to suffer. I seriously believe that once the word gets out about how Mercedes is improving, they will be back on track. German car companies could give the asian manufacturers a serious run for their money if they could just convince their dealers not to be such thieves.

    • 0 avatar
      psarhjinian

      Mercedes problem is very similar to what Toyota and Honda faced in ~1998: Cost.

      When they sold a cost-no-object product, they actually did pretty well. The problem is that they suddenly found themselves pitted against producers** who could make a car that was mostly as capable, just as reliable, but cost a hell of a lot less to make and could be sold for less.

      So Mercedes had a choice: do nothing and try and make it selling vehicles that offered no competitive advantage and get killed because Lexus could make a 95% S-Class for 70% cost, slit their throats and sell for less money, or cut costs and become competitive. They chose the latter option, because the first two were tantamount to suicide.

      The problem is that Mercedes was not set up to cut costs. It was hard for Toyota and Honda to do it, and it showed, albeit mildly, in the reliability rankings of products made from 97-02. Mercedes had nothing like Toyota’s manufacturing and QA adeptness; cutting QA, design and materials cost made their product demonstrably less reliable. Combine this with a management that refused to acknowledge any failings and you have a recipe for disaster.

      ** Generally this was Toyota/Lexus, but you could include BMW and VW/Audi in this as well

    • 0 avatar
      OliverTwist

      Cutting cost is not only the reason for the dwindling quality.

      Germany did something very unthinkable in the middle of 1990s: pushing the companies to force the employees to take early retirement at 55 rather than customary 65. It was hoped that this controversial measure would open up the tight employment market to the young graduates.

      However, the dire consequence was that those young graduates did not have enough experience and knowledge to carry on the stellar German quality tradition. Without senior employees to guide and mentor them, the young graduates stumbled often and screwed up royally. The result: shocking poor quality and reliability of Mercedes-Benz and BMW as well as other German products.

      My father was forced to retire at 55 with pension two-third lower than he was expected to receive. His company recalled him some months later to come back in and fix the mess left by the young, inexperienced graduates. My father refused and did this “I told you so. Your problem, you fix it.” routine.

    • 0 avatar
      FromBrazil

      Wow Mr oliverTwist! That just about accounts for what I’ve heard has caused VW’s “slip” in quality of late. I mean, they have generally sucked after killing the Beetle, but with the new Gol G5 problems have been so big it’s finally taking a toll on VW’s previously unassailable reputation as “the” reliable maker (recntly on a Brazilian website – of course unscientific – there was a survey asking which was the most reliable company and Toyota got 25%, Gm got 20%, Fiat 14% and VW 13%!!!). Friends and business partners tell me of how Brazilian operations of late have been run over by German-speaking only 20 to 30 year olds who think they know it all. I hope, for the company’s sake, that these fools have gotten their noses bloddy and that senior manegement has curtailled their carreers accordingly because if they are the future of VW, VW is damned.

      Maybe Mr Scmitt could weigh in.

  • avatar
    Tricky Dicky

    Surely Herr Baron VON Schmitt?!

  • avatar
    bucksnort

    …now if BMW could just figure out how to make them more reliable.

    Even the Bimmer Magazine editor does not recommend owning them out of warranty.

  • avatar
    eastcoastcar

    My mechanic, who services BMW and Mercedes tells me both brands have let quality go, and that an owner better be prepared to pay a lot of money to keep the cars working out of warranty. But regarding BMW, I seldom see BMW’s more than three or four years old on the road, and the ones I do see look pretty spent and sound it too (transmissions, engines..). I guess if a person is able to buy a new one every two years, either model is ok, but out of warranty, no, according to my mechanic. Racing cars aren’t meant for the long haul anyway.

    • 0 avatar
      Sam P

      “I seldom see BMW’s more than three or four years old on the road, and the ones I do see look pretty spent and sound it too (transmissions, engines..). ”

      Clearly, you don’t live in Seattle or Portland. If someone was to spit off a freeway overpass here in Seattle on I-5 at rush hour, chances are their phlegm would land on an E46 3-series (1999-2005/6) or an E39 5-series (1997-2003).

      Hell, I could go down to my building’s underground parking garage and take about 10 or 15 pictures of 5-10 year old BMWs that are used as daily drivers.

      As long as one gets a 6 cylinder non-turbo BMW with a manual transmission and goes easy on options and gimmicks, BMWs are not ridiculously expensive to own. FInd a good indie mechanic and you’re golden.

      You will have issues that pop up from time to time (window regulators, Z4 top motors, etc) but that’s above average for German cars. Don’t get me started on the Porsche IMS failures or the many horrific Audi issues that are out there. Compared to those marques, a BMW 3 series with a stick is practically Japanese as far as reliability goes (as long as you maintain them!)

    • 0 avatar
      golf4me

      Umm, I see 10yr old BMWs all over the place where I live. MBs too. As a matter of fact I have an E46 with 151k and in better shape than my g/f’s 2 yr old Lexus. I don’t baby it either and change the oil @15k miles. Only normal maintenance and a few minor things I’ve been able to do myself for a few hundred bucks. If people realized how easy a BMW is to work on, I think the old wives tale of them being expensive to service would die. Parts are no more expensive than other brands either if you buy online as well.

    • 0 avatar
      photog02

      I’m the owner of a 10 year old BMW. Now I would hazard that the newer ones with their million-mile oil change intervals might not last this long, but there is no shortage of metal Bavarians. None of the secondary systems may work, but they are still running.

    • 0 avatar
      guyincognito

      My 11 year old M3 is my racing car and daily driver.

    • 0 avatar
      theslik1

      I’m no Bimmer fanboi, but you’re stretching it a wee bit. I see plenty of E46 sedans running around and they mostly seem to be in good shape, at least outwardly. On the flip side, the current crop of turbos is going to have a hard time finding longevity. Remember that E90’s still have all the general BMW bugs of previous generations with significant added issues of their own. BMW will not (and probably won’t ever) provide a reliable fix for the N54’s high pressure fuel pumps. Throw in hideously expensive turbo replacements (and they will have to be replaced even though Mitsu makes a good unit) and I get the feeling that turbo E90’s will die off considerably faster than the previous generation. Four years of free minimal maintenance helps to sell new cars but after that it’ll be very ugly unless one gets a good CPO warranty. Of course, the normally aspirated models should fare better.

  • avatar

    I always saw MB as the car for fat bankers, while BMWs were for drivers. Even MB sports cars were consistently overweight…the only one with an appropriate balance was the 230SEL. The idea of a balanced, light, agile car isn’t anathema to MB, it’s simple inconceivable.
    Hey, different strokes for different folks….but I’ve never heard anyone talk about MB as a sports driving experience…it’s always as either a sorta Cadillac glide ride or a gladitorial monster rocket sled.
    Bring it on…….:)

  • avatar
    jmo

    I seldom see BMW’s more than three or four years old on the road

    Huh? 3 years?

  • avatar

    Growing up, MB was very expensive, but you had a good chance of giving the car to your kids after ten years to take to college. It was styled not to age too quickly. BMW was the driver’s car and the straight six was bulletproof-but the other engines were problematic. (man trans only….GM automatics blow @ 120k for $6k)

    MB chooses not to compete with the 3 series in the USA, and I’d probably go with 3 for a small car and an E classe for the family car. The C has always been “held back” by MB.

    Owning an E46, I’ve been happy with the overall reliability in 210k miles. BMWs eat all sorts of bushings, which are not horrible to replace at an indy mech, but at a dealer are punishing. A geek can keep the “normal” BMWs running. The bushings are why BMWs have that feel-but metal/rubber/metal tends to wear faster.

    Sadly, the C class, save the AMG versions, are not desirable. The ML is mostly seen in the ghetto in my area. The sports cars are works of art but for a tiny upper niche market.

    BMW has gone cheaper in the E90 3 series, and other than the turbo engine, there’s no reason to change out from the E46 (runflats ?! The horrid interior ?)

    BMW and MB have gone to “slightly better than Honda” at twice the money. A trusted indy mechanic repeats the article…Lease these cars, don’t buy them. If my E46 died or was wrecked, I’d buy another, low mileage with the 3.0 litre and sport package…not an E90

  • avatar
    jmo

    QA, design and materials cost made their product demonstrably less reliable.

    Do we have any data that the defects per 100 cars increased?

    Or was it more that a 1988 420 SEL was the gold standard with (let us say) 1.7 defects per 100 cars. Then Lexus came along with .62 defects per 100 cars and suddenly Mercedes seemed very unreliable in comparison.

    • 0 avatar
      Sam P

      Don’t get me started on Mercedes W126 reliability. Over my objections as a teenager (I highly favored an Audi 90 20 valve quattro, an E28 or E34 535i or a Subaru Legacy turbo sedan) my parents got a nice used V8 W126.

      Two timing chain tensioner failures over the course of 60,000 miles of ownership. Second time around, my dad sold the car as is on Craigslist. Someone picked it up for $1200 (early 2000s) and was going to throw a used engine in it. Good luck to them!

  • avatar
    Zeitgeist

    “Lastly, Rolls Royce branded cars were up 48.1 percent to 154 units (previous year 67 units).”

    ???

    Previous year 67 units = 100%, then 154 units = 229.85%, which makes a growth of 129.29%.

  • avatar
    jmo

    Don’t get me started on Mercedes W126 reliability.

    How did that compare to a 1988 735i, Jaguar XJ, Cadillac Seville, Lincoln Towncar, etc. in terms of reliablity?

    • 0 avatar
      Sam P

      Based on the experiences of people I know who owned the 6-cylinder ’88-’94 7 Series – the W126 didn’t compare well. At least the BMWs didn’t have the lovely habit of losing timing chain tensioners. The V8 and V12 BMWs wer another story.

      And the Town Car is a Panther platform Ford. Tough enough for hundreds of thousands of miles of taxi and limo service on the original transmission and engine. Try that in any modern European vehicle with an automatic transmission.

  • avatar
    John Horner

    Daimles deserves its own death watch. It has at least as many issues as GM did back when Farago penned his first GM Death Watch. A few for starters:

    Inbred executive management rife with palace intrigue.

    Multiple bungled large scale acquisitions followed by divestitures. (Heck, at least GM managed to make some money when they sold off Hughes and EDS.)

    An ever growing product line filled with a bunch of me-to vehicles and only a few stand outs.

    Arrogant, ethno-centric culture.

    Multiple major quality and reliability screw ups thanks in part to endless rounds of poorly thought out cost cutting.

    A massive decline in resale values over the past two decades.

    A complete failure to take the Japanese challenge (Lexus) seriously.

    By golly, Daimler even has its own Saturn like company within a company money pit: Smart.

    There are no signs of Daimler making the kind of executive and cultural changes which would be required to pull it out of the now well established long decline. Hubris is killing them.

  • avatar
    windswords

    I agree with Mr. Horner that a Daimler Death Watch is required.

    Could Mr. Farago be hired (payed) to write most/all of the installemnts? With lots of help from Mr. Schmitt? Pretty Please? We haven’t had a good death watch in a while. I miss ’em. Seriously, it needs to be done. How about it Mr. Niedermeyer?

    Daimler’s great crime was messing up Chrysler’s product development and executive suite and making off with its cash. Daimler’s great mistake was not learning anything from them. Because of the arrogance that Mr. Horner notes above, they looked down on their new American partners and never thought to see if any of their methodologies could be applied to Mercedes’ product development process. Chrysler had an evolving process that was a hybrid of Chrysler, American Motors, and Honda. At the time they could bring a car to market for less money than anyone, beating the former number 1 in that area, Toyota. Imagine if Daimler took just a few ideas and adapted them for Mercedes. What if the recent E and C class had been developed for 10% less Euros than they were, but still sold at the same price they do now. Would Daimler be losing money? They certainly would be losing a lot less money. An opportunity missed.

    • 0 avatar
      srogers

      Daimler didn’t do Chrysler any favours, but what did Chrysler really have going for them before Daimler got a hold of them?

      Realistically, what did they have that could compete with Toyota, Honda or even Ford or GM? The only people buying Chryslers were either brand loyalists, discount shoppers or people with soft hearts who just felt sorry for their sad products.

    • 0 avatar
      windswords

      srogers,

      read: http://www.allpar.com/corporate/fast-facts-1997.html

      “Chrysler’s owner loyalty rate increased nearly 50 percent in five years. Chrysler was the only automaker to be above the U.S. industry average in both owner loyalty and new-owner conquest rates.”

      “For three straight years, 1994 – 1996, Chrysler was North America’s lowest cost auto producer, according to the independent Harbour Report – the annual gauge of productivity for the industry. ”

      now read: http://www.allpar.com/history/chrysler-years/1998.php

      “Chrysler went into 1998 with a good, new product line and strong profits, and optimism for the future. … The very first of the cars to be developed under the AMC/Honda-influenced engineering system, the LH series, was re-engineered [all new] just five years after their introduction.”

      “Chrysler was making high profits, and had both more loyal customers and more new customers than average. Profit-sharing checks were sent out annually [my neighbor across the street got a check for $7,000 on top of his regular salary – he was just a fork lift driver in the warehouse], and suppliers were given a share of the billions of dollars they saved Chrysler Corporation each year. New cars were designed with supplier, customer, line-worker, and mechanics’ input to make them more reliable, easier to work on, cheaper, and more desirable.”

      “Chrysler sold a record 2,510,011 vehicles in the U.S. (9% more than in 1997); and, for the first time, over 3 million units were sold worldwide, including nearly 300,000 in Canada and just over 200,000 in the rest of the world”.

      Also read: http://www.allpar.com/history/chrysler-years/1992.php

      especially the section titled: The palace revolt of 1992

    • 0 avatar
      srogers

      Windswords;
      Obviously my opinion is based on a lot less data than yours, so you’ve got me there. And I admit to liking the LH while they lasted, except for the multiplicity of badge engineered models.

      But was Chrysler ever going to be able to follow up on the LH? Did they have anything else? (I know, Jeep, but I conveniently ignore the SUV market because I prefer to.)

      Purely on a personal level – I don’t miss any of the old Chrysler that Daimler killed off, so I’ve never felt the hate towards Daimler for it.

  • avatar

    I’ve been led to understand that part of the rivalry is geographic. Bavarians think that they’re smarter than what they see as the dull, boring, Swabians.

  • avatar
    porschespeed

    Though I have heard about the timing chain issues on 126s, my greymarket 500SEL had over 275K on the clock when I sold it, and I know more than a few still on the road with 200K+. Most of the cognoscenti regard the W140 as the ultimate luxo-tank.

    Personally, I want nothing to do with either firms offerings over the last ten years. Some have stellar performance, but they are just too techno driven for my taste.

    Daimler death watch? The symptoms are there, in the interests of fair play, why not?

    Besides, it’s time to start up GMDW-II.

    • 0 avatar
      rnc

      If MB really, really needed the money they would sale (and they should) there interest in EADS. It’s been nothing but a drag on them and because of pride the German government isn’t going to let the company become French only, so MB will get what they want for it.

  • avatar
    brandloyalty

    One thing Daimler could have learned from Chrysler is that Chrysler had more reliable wiring.

  • avatar

    Daimler should go and pick up a small almost-player in the Japanese market and plunder them for knowledge and facilities – someone like Suzuki or Isuzu. Unfortunately, that would be an admission that they don’t know what they are doing.

    Personally, I think the new C-class is pretty credible though, and the GLK is selling like hotcakes here in San Francisco.

    • 0 avatar
      stuki

      No kidding about the GLK. It’s practically everywhere!

      The runflats BMW burdens all their cars with, absolutely does not agree with SF’s “last fixed during the depression” road surface. Not only are they harsh, the sidewalls simply crack and bulge under any kind of load, needing replacement.

      The S is sooo much nicer that the 7 here, at least partly for that reason (it’s also more plush in general). Truth to be told, it’s actually not a bad beat up road car, for being a modern big rim / short sidewall design with Autobahn pretensions.

      That being said, after seeing some commenter on this site wax about the Panthers (I must admit I thought he was crazy), I went out and rented a TC for a week, and now I wouldn’t be so sure that a thoroughly updated version could not be just as “nice” in this environment as an S, for probably half the money and a quarter of the reliability headaches and repair costs.

      The softer sprung of the BOF Land Cruisers are almost as “plush” as the S, and within the limits imposed by the driving style of most CA S drivers, handles perfectly adequately. Literally knock them down a foot or so, as would be a modern Panther, and change out the rear axle for an IRS, and they should be reliable, plush, and as big as anyone could ever want them. But I guess either I’ve become a bit eccentric, or Ford management is crazy.

  • avatar
    jmo

    Bertle,

    A Baron is more than a Graf

    Are you translating Baron to mean Freiherr?

    If you are you know that it goes Frieherr(Baron), Graf(Count), Fürst (Prince), Herzog(Duke), König (King) and Kaiser(Emperor).

  • avatar
    jimboy

    Daimler has ridden on its (mostly) unearned rep for quality for too long. Instead of working with its partners, it cannibalizes them to support it’s own inferior product and engineering. Most mercedes buyers these days are nouveau rich wannabe’s who deserve what they get, a poseur car. The end can’t come soon enough,IMO.

  • avatar
    werewolf34

    Frankly all the German makers are racing to the bottom on actual quality. Compare running costs and longevity of an 80s, 90s, early 00s, and late 00s German model.

    They make them to break so you lease and put more dough in their pocket. Unfortunately the Japanese seem headed in the same direction.

    As for me I am going to run my GS400 until it hits 300k

  • avatar
    werewolf34

    The GLK is a abomination.

    It’s a cute-ute with 20″ wheels and run-flats.

    It removes all pretense of any off-roading and is a mommy-wagon which gets crappy gas mileage.

    But it sells…poseur car for poseur people

  • avatar
    BlackPope808

    For both BMW and Mercedes, and I have owned both, it sometimes can be a little hard too swallow when every time the car goes in for a problem it ends up costing you 4 digits. 40k mile check for 04 E320 Estate: $967.00 (then another $2000.00 when driver’s side air suspension decided to quit on the way to a funeral, a week after the 40k check). 40k mile check for 04 LS430…$176.00 and the car as washed.

  • avatar

    From long ago, I recall, IIRC, that the Beetle’s rep for quality and bug-freeness was due to its introduction in the US long after it was mature product that had thrashed its problem out in Europe…when the Golf was introduced it was a problem-plagued as any other car…

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