Even German Cabbies are down on MB...

[PC Dave]

Even German taxi drivers no longer hail a Mercedes
By Richard Milne

Financial Times: February 17 2005 02:00

Visitors travelling by taxi to the DaimlerChrysler headquarters in Stuttgart used to have one choice of vehicle: Mercedes. The same was true throughout Germany. But on visits in the recent wintry months, the taxi rank has usually been headed by a Volkswagen, Opel or - worst of all - a Mazda.

Jürgen Geier, a Stuttgart taxi driver who used to drive a Mercedes before switching to Audi, explains: "Mercedes has really gone downhill in the last few years.

"I have colleagues who had to take their cars to be repainted practically every week. They have got a lot of work to do to gain their reputation back."

This anecdotal evidence, albeit from the heaviest users and sharpest critics of cars, highlights the trouble in which Mercedes finds itself. Its reputation for quality lies in tatters as it has been forced to admit that its cars, which once set the industry standard for reliability, are prone to breaking down.

Last week the Mercedes Car Group, which includes the lossmaking Smart small-car brand, reported its worst quarterly profit for 13 years and admitted that this year might be more challenging still. It even suffered the ignominy of seeing its profits overtaken by Chrysler, the previously struggling US mass-market carmaker that merged with Daimler-Benz in 1998.

For Germany's taxi drivers, this comes as no surprise. "Opels [made by General Motors of the US] are half the price of Mercedes and the quality is now the same," says Anis Ahmad, a Frankfurt taxi driver with an Opel Zafira.

M. Daim, who drives a Mercedes from the 1990s, says: "This one is top class but, when I replace it, I won't buy Mercedes again."

The German Taxi and Hire Car Association (BZP) says that Mercedes' proportion of new taxi sales has fallen since the turn of the century from 70 per cent to 50 per cent. Simultaneously, VW's market share has risen from a tiny proportion to more than 20 per cent and is expected to grow further when it reports figures next month. Opel has benefited from an aggressive push into the taxi business that included offering attractive financing deals.

"Quality at Mercedes played a role in this," says the BZP. "There were so many problems, particularly with new technology." Partly as a result of cramming so much gadgetry into its cars without checking whether it all functioned together, Mercedes has slipped in the past decade from first to 28th place in the respected JD Power reliability survey.

"We are seeing things that should not have been allowed to happen in terms of quality," says one London analyst. As a result, Mercedes' operating margin in the fourth quarter dropped to a miserly 0.16 per cent compared with one of about 7 per cent in the previous quarter for rival BMW.

Daimler executives have tried to strike an upbeat note. Jürgen Schrempp, chief executive, said last week that the situation would be under control within a year.

Eckhard Cordes, Mercedes' new head, claimed that the cars now leaving its factories were the best quality it had ever made. But analysts at Morgan Stanley estimate that resolving the issue, which Mr Cordes inherited last year from Jürgen Hubbert, his predecessor, will cost €500m (£346m) a year.

Most analysts expect the company to gain control of the situation eventually and regain some lost clients. Taxi drivers may be among the hardest to woo back. Mercedes gained its dominant position thanks to the durability of its cars - perhaps best displayed by Gregorios Sachinides, a Greek taxi driver, who clocked up 2.8m miles in his 240D model.

But as the technology failings have piled up, so other reasons have helped erode Mercedes' market share for taxis - chiefly the poor domestic economic climate during which many drivers have seen their takings halve.

"Price, as ever, also had something to do with it," the BZP says. A €20,000 Opel Zafira or VW Touran, both of which will seat seven, make more economic sense than a €40,000 Mercedes. "Clients don't care and we can earn more [through the added space]," says Mr Ahmad.

However, secondhand sales of older, more reliable Mercedes models are booming in the German taxi market, says BZP - with the result that 70 per cent of all taxis still bear the famous star logo.

[KenSilver]

Considering that Mercedes made the first car in the world and has been a continuing symbol of class, extravagance and reliability over a hundred years, it will take a lot to unseat the marque.

The latest round of a decade of lousy accountant-built vehicles is just a blip in the history of this company. It will recover. And there will always be a large, loyal group of people who consider the brand more important than its faults.

Even though the Japanese far outshine practically every other make for reliability and extras, I doubt whether they will ever occupy the same cache as Mercedes.

I've just bought a Lexux SUV. It is streets ahead of any of the ML series, or indeed any other 4x4 I've ever driven, but it won't induce me to buy the Lexux's SL equivalent. It's just not an area of crossover for me, and I think a lot of SL owners agree.

Ken Silver
--------------
~1993 SL500, glistening triple black, xenons, AMG facelift to 2002 style.
~1999 SLK 230 Kompressor, silver/black leather, CD, immaculate
~1999 Lexus LX470, sand/ivory leather.
~1999 Suzuki Grand Vitara. black & silver.
~ex 350SL, 230E, 280E, MX5, Jaguar Daimler and a lot of other makes not nearly as nice.

[420SEL]

I'll go along with KenSilver on this one. If I need to replace my current Benz, I'll buy an older one before I'd consider a lexus, and wait out the problems. I think MB has their priorities flipped upside down. Too much mass production to compete against makes that aren't even competition,

I'm not remotely interested in new cars, mainly because I couldn't spend the money on them. Call me nuts, but when I buy another sedan, iot will probably be an Audi S4, like a 2000 or so. I think they're great looking, especially the interiors. My dad wants to buy an MB because he's so smitten with mine, and I'm trying to convince him not to. He's looking at a late 90's turbo diesel, I don't even know the model. If he buys it, I know he'll be dissappointed...

[PHAEDRUS242]

2000 S4=Great car, big $$$ to keep running. Worse than any similar performing MB in terms of reliability. Great driver though.

[Botnst]

Originally Posted by Orkrist

I'm not remotely interested in new cars, mainly because I couldn't spend the money on them. Call me nuts, but when I buy another sedan, iot will probably be an Audi S4, like a 2000 or so. I think they're great looking, especially the interiors. My dad wants to buy an MB because he's so smitten with mine, and I'm trying to convince him not to. He's looking at a late 90's turbo diesel, I don't even know the model. If he buys it, I know he'll be dissappointed...

I think Narwhal has one (late 90's diesel) that he is very happy with. If he isn't, he knows where he can dispose of it.....