By on March 4, 2020

Still in the midst of a $1.4-billion restructuring plan that aims to cut 10 percent of its workforce, Mercedes-Benz is reconsidering what its product lineup should look like moving ahead. While most of the doomed models will be chosen due to lackluster demand (e.g. X-Class pickup) plenty will be nixed as a result of tightening emission laws. Mercedes parent Daimler issued two profit warnings in 2019 after the luxury brand was fined $960 million in an emissions-cheating settlement. Like many automakers, it was also hemorrhaging cash through its investments in electrification.

An apt analogy for the automotive industry’s stampede toward EVs would be lemmings hurling themselves off a seaside cliff — but not because of the popular misconception that the critters are intentionally committing mass suicide. When lemmings collectively off themselves, it’s the result of migratory behavior gone awry. They simply bunch up and move in a singular direction, largely unaware of the consequences. 

However, automakers have to contend with social pressures the little rodents are not subjected to. Environmental regulations in places like Europe and China have effectively forced the hand of many automakers hoping to sell their wares in any meaningful volumes without incurring massive fines. This leaves automakers like Daimler in a bit of predicament, as they lose money on costly development projects that they’ve effectively been forced into. It’ll definitely influence which models/trims Mercedes-Benz places beneath the axe.

Daimler board member Markus Schaefer addressed the issue on Tuesday, telling reporters that cost-cutting would likely encourage the company to reduce the number of variants in Mercedes’ lineup, while platforms and powertain options were further consolidated.

“We will review our current lineup and the idea is streamlining the portfolio,” he said.

According to Reuters, a number of the products slated for elimination would be the result of those tightening emission rules, making note of the Euro 7 exhaust standards. “The question is how many engines you take through the gauge, through Euro 7,” Schaefer explained. “Of course the four-cylinder has more chance to make it than the V-12 to pass the gate.”

From Reuters:

Separately Daimler CEO [Ola Källenius] said the automaker has “no issues” securing electric vehicle battery cells, and is ramping up battery production to meet high demand for plug-in models.

“There is such a high demand for plug-ins, we are ramping up battery production as we speak,” [Källenius] said on the conference call.

Daimler plans to add electric vehicle capacity this year and next year.

[Källenius] said demand for plug-in hybrid models is driven in part by German companies guiding employees who get company cars as a benefit to choose electrified models.

Europe also has government incentives in place to encourage plug-in purchases, with Germany offering sizable tax breaks for buying electric — something Källenius said helped raise demand immensely. European passenger vehicle registrations rose 1.2 percent last year (moving roughly 180,000 more cars than in 2018). About 75,000 of the total sales were EVs, representing a 121-percent increase over the previous annum and providing a silver lining for the industry.

Still, it’s hardly a bed of roses. It’s long been rumored that German manufacturers are having serious problems with their battery suppliers, with Mercedes said to be butting heads with LG Chem. Daimler denies that the situation resulted in lowered production targets for the EQC electric crossover. However, LG Chem was also believed to at the center of Audi’s delay on the E-Tron and a production stall of Jaguar’s I-Pace. Regardless of what is causing the battery supply issue, the Germans are now seeking to lock down the raw materials necessary for battery production for themselves; meanwhile, no one is discussing scaling back EV development programs.

They’re in it to win it … or lose it, if the market dictates that outcome.

[Image: Franz12/Shutterstock]

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7 Comments on “Daimler CEO: ‘Streamlining the Portfolio’ Necessary for Mercedes-Benz...”

  • avatar

    So we’ll probably kiss some AMG models good bye due to fuel economy concerns, but abominations like the GLB (who named that thing???) will likely survive. Strange times we live in.

    • 0 avatar

      Yes, MB is focusing on products that make sense and ditching the ones that don’t. Seems like a solid strategy for survival.

      I am hoping they can keep the AMG V8s alive through hybridization, but ultimately the environment is more important than more V8s

  • avatar

    SMFH. Both Benz and BMW have gone model crazy the last 15-20 years introducing 1,2,3,4,5,6,7,8 car series when nobody asked for them. Stick with 3 car models with wagon variants if you want and 3 SUV models, with the possibility of a truck. Offer efficient engines and hey maybe, electrify the models you have instead of introducing weird electric exclusives. When the tech gets mature, and we have a LONG way to go to get there, then introduce your electric only models.

    • 0 avatar

      Agreed – BMW has been slicing and dicing, filling every niche market they can find (or even create). Ditto with MB.

      I will lament the passing of their V8s – a few blocks away someone owns a AMG GLE. The sound of the bi-turbo V8 is one of the better exhausts I’ve heard.

    • 0 avatar

      Agreed, BMW and MB stuffed themselves into a corner by directing R&D euros into all those microniches and not being able to recoup those costs so that they have enough cash to pivot into electrification.
      I’m starting to see GM do this with SUVs; does Chevy really need 7 (not including not-for-US models) of along with the growing Cadillac and Buick lineup? They better hope this New Hummer thing goes somewhere. It’ll be interesting to see whether this path vs the MachE is the more successful EUV (electric utility vehicle?) strategy in the US.

  • avatar
    Tele Vision

    “[Källenius] said demand for plug-in hybrid models is driven in part by German companies guiding employees who get company cars as a benefit to choose electrified models.”

    I asked my company, “Were I to buy an electric car, can I charge it all day at work?” The answer was ‘Don’t Ask/Don’t Tell’. I’d need a Rivian for where I live and work, though.

  • avatar

    Whatever the reason, Mercedes needs to cull through their lineup…who can even keep all those models straight anymore? And do you really need an AMG of nearly everything?

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