JawZ wrote:Break it down for me Barney style.
After sales? Is an A-Class guaranteed to break down thus requiring parts? Can you explain this to me more clearly so I can understand?
Couple of other question Ron, what have your historical fuel prices been and what do the taxes raised from the fuel sales give you? Free healthcare?
No, no car we make is guaranteed to break down. Come on, as premium car producer that would just be plain stupid. I really don't believe any company makes cars that are guaranteed to break down. Turn it the other way around, and you get much closer. We, and any other maker for that matter, do not make cars that are guaranteed to not break down - other than for the period that the warranty provides, two years (in the EU, anyway).
Also, the warranty and goodwill regulations allow us to limit much of it, especially goodwill, to customers who have been servicing their vehicles in garages meeting the standards set forth by Mercedes-Benz - those with the star on the roof, basically, contractual partners. So you just charge more for a service or parts than an independent garage. In return, the customer can rest assured that he won't be charged if there's a constructive defect that needs to be repaired, and that the technician has been trained on servicing our specific products as well as having the required tools to do so.
Also, over here, the company I work for (the MB Customer Assistance Center) can somewhat influence our contractual partners if they treat our customers unfairly, but we don't have much leverage against independent garages. If a garage with a star or any part of the Daimler organization treats you unfairly, there a central point of contact for redress - somewhat independent, since we don't get budgeted by the dealers, garages & national organisations but by HQ - to improve customer satisfaction.
Of course, our service (at least in the EU, the US is a different market as I explained above) it's not just limited to that, goodwill is essentially a voluntary compensation if we feel the part should not have broken down yet, but there's no legal entitlement to it. In practice this means that if you as customer have a good relationship with your dealer (meaning you bought your car there and service it there), or have been driving Mercedes for thirty years, they'll do a hell of a lot for you for free, even out of their own pockets if Daimler doesn't pay for it. But in the end, we're all businesses, Daimler and dealers alike, and as such aim for profit. That profit can only come from customers, thus you.
In the S-Class segment, people want costs they can calculate with - company leasing schemes, and avoid hassle if something happens. So the S-Class comes with a quite premium price, but part of that you get back through warranties and goodwill in the long run.
In the A-Class segment, you sell through price. So the margin on the sale is often eaten up in rebates. Profit still has to come from somewhere, otherwise we would be better off not offering it. If you can't make profit on the sale, you have to make profit on the service.
You should compare the service costs for an A150 to a S500. You'll find that the factor between them is nowhere near the factor in sales price. The service on the S500 does not cost ten times more than that on the A150.
That said, cost cutting programs have been a bane for us in the past, to be honest. There were times when we'd use the 1c screw or bolt instead of the 1.5c one. We shouldn't have, in my private opinion. Mercedes-Benz should always be about lasting quality, like it was most of the time in its existence. But for that you've always paid a premium price - at the point of sale and afterwards, that's our business model. And with that premium price comes the obligation of quality, safety and innovation.
But you really cannot transfer most of that to the situation of a volume producer like GM in an entirely different market, the US. I could only tell you how we do business over here. And what I've written is really just a VERY abbreviated version, leaving much out. It would take a number of long nights with many beers and a disappearing NDA to tell the rest.
DaimlerChrysler as such failed to produce synergies because the Daimler (quality) and Chrysler (quantity) sectors did not allow for much interaction between the two brands. Take this as a sign that not all Daimler lessons learned are applicable to Chrysler, or GM for that matter. We have our business model and they have theirs.
On a sidenote, Daimler still produced a noticeable profit last year. I'm confident we'll do the same this year, especially with the new E-Class out now (not the one still on
http://www.mbusa.com). We have been updating our engines... how does a 2.2 liter engine with 204 hp and 367 ft lb torque sound? 0-100 km/h (roughly 0-60 mph) in 6.9 secs, and top speed of 150 mph? Oh, and did I mention 43 mpg? The E250 CDI may not make it to the US market, but other new engines will, including diesels. (I did the metric to imperial conversion myself, so mistakes are possible and the figures are not official).
I'm not trying to be a salesman here to sell, I'm just saying other companies make progress.
