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Old 09-10-2004, 10:58 AM
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Mercedes not paying for service in MY2005

Taken from:

"RANTS" by Peter M. DeLorenzo

The Most Clueless Car Company in the World.

Detroit. After the relentless spate of bad news coming from Mercedes-Benz over the last three years - led by a seemingly unending series of Juergen Shrempp-orchestrated management blunders that almost forced the company into serious financial jeopardy - you'd think that somewhere, somehow, they'd finally start to get it. That after all the marketing and product miscues - including the perilous journey down-market in the U.S., the horrendous warranty costs due to the company's blind infatuation with electronic gadgetry, which contributed exactly zero to the overall driving experience and did nothing but alienate longtime M-B loyalists, resulting in dismal, historically all-time-low quality ratings, all topped off by that wildly unremarkable attempt at building a "hyper-luxury" car (the Maybach), which landed with a resounding thud in the marketplace after deservingly being written-off as an S-Class on steroids - you'd think that some common sense and reason would finally begin to penetrate through the traditional Fog of Arrogance that hangs over M-B management like a sodden shroud.

But no, after all, we are talking about Mercedes-Benz, the one car company in the world that continues to function as if locked in a time-warped fantasy land where shiny, happy people continue to pay through the nose just for the "privilege" of guiding a glittering example of German industrial might (adorned with the majestic three-pointed star, of course) down the road. The Mercedes-Benz management mindset is so locked in to the past and guided by its "What, us worry?" mantra that even when confronted with the truth about their deteriorating place in the automotive world and how they had to change if they wanted to remain a force in the 21st century, they instead shot the messenger - which led to the forced departure of the best and brightest young car executive in the business, Wolfgang Bernhard.

Mercedes-Benz is so screwed up that they're beginning to conjure up memories of the bad old days of GM - only worse. And that's saying something.

The latest evidence that Mercedes-Benz has lost it? They've decided to do away with their free maintenance program during the warranty period starting with the 2005 model year.

Let me repeat that. The company that managed to piss off legions of its customers over the last three years by launching a series of cars with myriad massive electronic failures, interminable waits for replacement parts and a shrug from dealer service managers that suggested that, "We're sorry but there's nothing we can do - they all do that," is now going to ask its customers (at least the ones who haven't permanently defected to Lexus, BMW and even Cadillac) to pay for their own maintenance.


Mercedes-Benz executives, of course, are falling all over themselves trying to explain that under the old service program maintenance wasn't totally free, that customers did have to pay for parts that had to be replaced because of normal wear and tear - things like disc brake pads and windshield wiper blades, for example. But I'm quite certain that distinction will be lost on Mercedes-Benz owners, especially when they will now be asked to purchase maintenance packages that start at $576 for just two years on a C-Class.

If this move weren't so outrageously ill advised, it would be comical, and it's proof positive that Mercedes is operating in a vacuum where the real world isn't allowed to intrude - a real world with formidable competitors like BMW, which covers all service costs for its customers, for four years or 50,000 miles, or Lexus, which leads the industry in the comprehensive way it takes care of its customers. It's no wonder that these two companies have blown by Mercedes in the market, leaving it in the dust.

And the real reason behind this?

Mercedes-Benz warranty costs were so huge over the last few years that Juergen Schrempp is now riding herd on Juergen Hubbert, the departing chief of the Mercedes-Benz division, to stop the bleeding and extract profits from wherever he can find them. And if that means docking its customers even more for the "privilege" of driving a Mercedes, then so be it.

Note that there's nothing in there about building better cars that are screwed together properly and that don't break to begin with, which would negate high warranty costs before they become an issue. Didn't anyone bother to raise their hand back at headquarters and say, "Gee, we've pissed off so many of our loyal customers in recent years with our horrible quality performance, and we've seen our quality scores plummet to new depths - don't you think it might be a good idea to go out of our way to take care of the customers we have, and do everything in our power to attract new customers with the most comprehensive customer service program in the industry?"

I'm sure if that perspective was raised it was summarily dismissed as bordering on insubordination. After all, the executive branch at Mercedes is all about maintaining protocol and adhering to the pecking order - not about doing the Right Thing.

This decision confirms that the Fog of Arrogance that has defined Mercedes-Benz as a company from the very beginning is very much alive and well. It impedes Mercedes executives' ability to think rationally, and it prevents them from seeing the automotive world as it is today, instead of how it was in their "glory days."

By doing away with its maintenance program, Mercedes-Benz is not only refusing to acknowledge its recent dismal performance in the marketplace, or the fact that the world's automotive landscape has changed forever, it's sending the unmistakable message that it couldn't care less - about its competition, and most important, about its customers.

Mercedes-Benz has now officially gone from being "Engineered Like No Other Car in the World" to being "The Most Clueless Car Company in the World" - in no time flat.

Thanks for listening, see you next Wednesday.

Peter M. DeLorenzo founded - an Internet magazine devoted to news, commentary and analysis of the automotive industry, automotive marketing, strategy and product development - on June 1, 1999. Since then, has become a weekly "must-read" for leading professionals within and outside the industry, including top executives at the car companies, suppliers, dealers, journalists, financial analysts, enthusiasts, and people directly involved in motorsports. Prior to launching the site, Peter spent more than two decades in automotive advertising and marketing, holding top-level positions as CD and ECD at agencies including DMB&B, William Esty, BBDO and Campbell-Ewald. In addition to his editorial work on, Mr. DeLorenzo occasionally consults for enlightened automobile companies. The opinions expressed in his columns are his, and his alone, and do not necessarily reflect those of his clients - JJP

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Old 09-10-2004, 12:40 PM
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