Piech And Suzuki Spook Dr. Z. And Ghosn

Bertel Schmitt
by Bertel Schmitt

Guess who was matchmaker for Daimler’s three-way tie-up with Renault and Nissan? The Nikkei [sub] thinks it was Volkswagen. VW’s alliance with Suzuki “spooks Daimler into thinking small,” says the Tokyo business paper. And that’s quite a change for formerly bigthinking Daimler.

“We have to use the Franco-German alliance to revive our dismal compact car business,” said Daimler CEO Dieter Zetsche, who spearheaded the plan to combine the expertise of the two automakers.

Daimler’s small Smart has been a huge failure. In the 12 years Smart cars have been sold, 11 years ended with a loss. In 2009, the year of buying tiny (if at all,) annual Smart sales dropped18 percent. Daimler has considered selling off Smart several times. The attempts to sell the brand were even less successful than selling the cars.

And why isn’t Daimler calling it quits with the small fry? Says the Nikkei: “One reason is that Zetsche has grown increasingly wary of VW’s growing influence.” And so he should.

VW is way ahead of Daimler in emerging markets, such as China and Latin America, with its compact cars. Zetsche is especially afraid of Audi AG, a wholly owned subsidiary of VW. Audi is treading on Daimler’s turf, and they are making money. Audi achieved an operating profit margin of 5 percent in 2009, a year when you could not give away high-end cars. In the same year, Daimler’s passenger-car division suffered a loss of €500m, the whole company lost €2.6b. Audi just announced a record first quarter with worldwide sales climbing 26 percent.

piech and suzuki spook dr z and ghosn

Dr. Z. looks worriedly at the sales chart. Audi’s sales are steadily climbing, while Daimler is treading water. Audi sold 950,000 vehicles worldwide in 2009, and the plan is to sell .5 million in 2015.

Zetsche’s partner Ghosn also casts a very wary eye on VW. Renault lost €3.1b in 2009. The VW-Suzuki alliance did put the industry into speed-dating mode. Ghosn already indicated that he might want to entertain more partners than Renault, Nissan and Daimler.

Rumor has it that there might be more between BMW and PSA than building engines. And with all the coupling going on, nobody wants to end up as a wallflower. Nothing is spookier than being all alone.

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  • ConejoZing ConejoZing on Apr 12, 2010

    "And with all the coupling going on, nobody wants to end up as a wallflower. Nothing is spookier than being all alone." Well, there is business. Then there's personal life. In the world of personal life relationships, it could strongly be argued that it is better to be a cold, tormented loner than be Tiger Woods or Tiki Barber. Funny thing is I am a VW (and former Audi) driver and in a smaller town that thrives on relationship gossip I am known mostly for being an aloof, enigmatic loner (who keeps in very good shape cycling around) lol!

  • Blowfish Blowfish on Apr 12, 2010

    Daimler's signs & symptoms are consistent with the diagnosis of " Getting screwed coming & going" Her Smart & Maybach were probably the worst two in all the A,B,C,S, SL, SLS Klass line up. I didnt think Smart were that bad suffering in lack of sales and not even attract new suitor to buy her. Sadly thats kind of suck in Life when u're at the either end of the extreme, Smart, Hummer, Maybach are kind of being lumped together.

  • Funky D I despise Google for a whole host of reasons. So why on earth would I willing spend a large amount of $ on a car that will force Google spyware on me.The only connectivity to the world I will put up with is through my phone, which at least gives me the option of turning it off or disconnecting it from the car should I choose to.No CarPlay, no sale.
  • William I think it's important to understand the factors that made GM as big as it once was and would like to be today. Let's roll back to 1965, or even before that. GM was the biggest of the Big Three. It's main competition was Ford and Chrysler, as well as it's own 5 brands competing with themselves. The import competition was all but non existent. Volkswagen was the most popular imported cars at the time. So GM had its successful 5 brands, and very little competition compared to today's market. GM was big, huge in fact. It was diversified into many other lines of business, from trains to information data processing (EDS). Again GM was huge. But being huge didn't make it better. There are many examples of GM not building the best cars they could, it's no surprise that they were building cars to maximize their profits, not to be the best built cars on the road, the closest brand to achieve that status was Cadillac. Anyone who owned a Cadillac knew it could have been a much higher level of quality than it was. It had a higher level of engineering and design features compared to it's competition. But as my Godfather used to say "how good is good?" Being as good as your competitors, isn't being as good as you could be. So, today GM does not hold 50% of the automotive market as it once did, and because of a multitude of reasons it never will again. No matter how much it improves it's quality, market value and dealer network, based on competition alone it can't have a 50% market share again. It has only 3 of its original 5 brands, and there are too many strong competitors taking pieces of the market share. So that says it's playing in a different game, therfore there's a whole new normal to use as a baseline than before. GM has to continue downsizing to fit into today's market. It can still be big, but in a different game and scale. The new normal will never be the same scale it once was as compared to the now "worlds" automotive industry. Just like how the US railroad industry had to reinvent its self to meet the changing transportation industry, and IBM has had to reinvent its self to play in the ever changing Information Technology industry it finds it's self in. IBM was once the industry leader, now it has to scale it's self down to remain in the industry it created. GM is in the same place that the railroads, IBM and other big companies like AT&T and Standard Oil have found themselves in. It seems like being the industry leader is always followed by having to reinvent it's self to just remain viable. It's part of the business cycle. GM, it's time you accept your fate, not dead, but not huge either.
  • Tassos The Euro spec Taurus is the US spec Ford FUSION.Very few buyers care to see it here. FOrd has stopped making the Fusion long agoWake us when you have some interesting news to report.
  • Marvin Im a current owner of a 2012 Golf R 2 Door with 5 grand on the odometer . Fun car to drive ! It's my summer cruiser. 2006 GLI with 33,000 . The R can be money pit if service by the dealership. For both cars I deal with Foreign car specialist , non union shop but they know their stuff !!! From what I gather the newer R's 22,23' too many electronic controls on the screen, plus the 12 is the last of the of the trouble free ones and fun to drive no on screen electronics Maze !
  • VoGhost It's very odd to me to see so many commenters reflexively attack an American company like this. Maybe they will be able to find a job with BYD or Vinfast.