REPORT: Sagging SUV sales, weak dollarWILL bring Mercedes C-class production to U.S
11-14-09, 09:33 PM
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REPORT: Sagging SUV sales, weak dollarWILL bring Mercedes C-class production to U.S
http://www.autoblog.com/2009/11/13/r...mercedes-c-cl/
Over the past two years, sales of SUVs from virtually all automakers have sagged deeply as fuel prices have risen and the economy has gone into the dumper. Mercedes-Benz is no exception, as sales of its ML, GL and R-class have dropped from a combined 152,500 in 2008 to just over 83,000 so far this year. At the same time, the U.S. dollar has lost significant value against most world currencies, including the Euro. The declining dollar makes it increasingly difficult for companies importing cars to the U.S. to make a profit, especially on low end models.
For Mercedes, this may be the perfect time to shift some production of its smallest model currently offered in the U.S. to its American plant, the sole global source of the aforementioned SUVs. The plant in Vance, Alabama could soon add production of the C-Class which is also the company's top seller in this market. At a media briefing in New York Thursday, CEO Dieter Zetsche acknowledged that a decision on U.S. production of the C-Class would be made soon. If it happens, it will give Mercedes a significant cost advantage on those cars. That cost advantage could allow Mercedes to reintroduce smaller, four-cylinder engines in the C, which is currently only offered with a V6 in the U.S.
Over the past two years, sales of SUVs from virtually all automakers have sagged deeply as fuel prices have risen and the economy has gone into the dumper. Mercedes-Benz is no exception, as sales of its ML, GL and R-class have dropped from a combined 152,500 in 2008 to just over 83,000 so far this year. At the same time, the U.S. dollar has lost significant value against most world currencies, including the Euro. The declining dollar makes it increasingly difficult for companies importing cars to the U.S. to make a profit, especially on low end models.
For Mercedes, this may be the perfect time to shift some production of its smallest model currently offered in the U.S. to its American plant, the sole global source of the aforementioned SUVs. The plant in Vance, Alabama could soon add production of the C-Class which is also the company's top seller in this market. At a media briefing in New York Thursday, CEO Dieter Zetsche acknowledged that a decision on U.S. production of the C-Class would be made soon. If it happens, it will give Mercedes a significant cost advantage on those cars. That cost advantage could allow Mercedes to reintroduce smaller, four-cylinder engines in the C, which is currently only offered with a V6 in the U.S.
12-03-09, 12:08 PM
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FRANKFURT, Dec 2 (Reuters) - Daimler (DAIGn.DE) will switch production of roughly a fifth of its Mercedes C-Class models to the United States from Germany in 2014 in a move to avoid damaging currency fluctuations and protect its margins.
The announcement raised fears among workers in Germany that Daimler's home market is losing importance as a production hub for luxury vehicles and workers at the key Sindelfingen plant downed tools in protest.
Daimler's plan marks another step in a broader strategy by global corporations to concentrate production and sales of products within the same currency or trade zone.
Rival BMW (BMWG.DE) recently increased production capacity at its U.S. site in Spartanburg, South Carolina for similar reasons.
The IG Metall union said Daimler's move was a "blatantly wrong decision" putting about 3,000 jobs at risk and pledged to fight it with all means at its disposal.
German labour leaders are already alarmed at proposals to shed thousands of auto workers' jobs at Opel under parent GM's [GM.UL] restructuring plans.
"From a strategic and economic point of view, this step is absolutely necessary for Mercedes-Benz to remain competitive in the future and utilise its chances for growth," Daimler Chief Executive Dieter Zetsche said in a statement on Wednesday.
LESS VULNERABLE
Daimler said producing more vehicles in the United States will make the company less vulnerable to currency swings between the euro and the dollar, and enable savings of about 2,000 euros per C-Class compared with cars imported from Germany.
Daimler's personnel head Wilfried Porth told a telephone conference there would be no job cuts in Sindelfingen and that the company planned to add 1,000-1,200 jobs in the United States from 2014.
Daimler's Mercedes-Benz passenger car production site in Sindelfingen employs more than 36,000 staff. About every third car sold by Mercedes-Benz worldwide is a model from its C-Class family, which also includes the coupes SLK and CLK.
German luxury carmakers have drawn few benefits from the flurry of subsidy programmes like the "cash for clunkers" schemes and have been suffering hefty declines globally this year.
Daimler shares rose 0.3 percent to 35.19 euros at 1247 GMT, while Germany's blue-chip DAX index .GDAXI fell 0.04 percent.
In addition to making the current Mercedes-Benz SUV models, Alabama will add production of nearly 20 percent of the future C-Class volumes, Daimler said.
Roughly 10 percent of future C-Class production will be built in Mercedes' South African plant of East London, where the model is produced for right-hand drive markets.
Another 10 percent will be built at Beijing Automotive's (BAIC) site in China.
By comparison, about a half of current C-Class production is in Bremen, while another third comes from Sindelfingen. The rest is built in South Africa and China.
http://www.reuters.com/article/usDol...=11604&sp=true
The announcement raised fears among workers in Germany that Daimler's home market is losing importance as a production hub for luxury vehicles and workers at the key Sindelfingen plant downed tools in protest.
Daimler's plan marks another step in a broader strategy by global corporations to concentrate production and sales of products within the same currency or trade zone.
Rival BMW (BMWG.DE) recently increased production capacity at its U.S. site in Spartanburg, South Carolina for similar reasons.
The IG Metall union said Daimler's move was a "blatantly wrong decision" putting about 3,000 jobs at risk and pledged to fight it with all means at its disposal.
German labour leaders are already alarmed at proposals to shed thousands of auto workers' jobs at Opel under parent GM's [GM.UL] restructuring plans.
"From a strategic and economic point of view, this step is absolutely necessary for Mercedes-Benz to remain competitive in the future and utilise its chances for growth," Daimler Chief Executive Dieter Zetsche said in a statement on Wednesday.
LESS VULNERABLE
Daimler said producing more vehicles in the United States will make the company less vulnerable to currency swings between the euro and the dollar, and enable savings of about 2,000 euros per C-Class compared with cars imported from Germany.
Daimler's personnel head Wilfried Porth told a telephone conference there would be no job cuts in Sindelfingen and that the company planned to add 1,000-1,200 jobs in the United States from 2014.
Daimler's Mercedes-Benz passenger car production site in Sindelfingen employs more than 36,000 staff. About every third car sold by Mercedes-Benz worldwide is a model from its C-Class family, which also includes the coupes SLK and CLK.
German luxury carmakers have drawn few benefits from the flurry of subsidy programmes like the "cash for clunkers" schemes and have been suffering hefty declines globally this year.
Daimler shares rose 0.3 percent to 35.19 euros at 1247 GMT, while Germany's blue-chip DAX index .GDAXI fell 0.04 percent.
In addition to making the current Mercedes-Benz SUV models, Alabama will add production of nearly 20 percent of the future C-Class volumes, Daimler said.
Roughly 10 percent of future C-Class production will be built in Mercedes' South African plant of East London, where the model is produced for right-hand drive markets.
Another 10 percent will be built at Beijing Automotive's (BAIC) site in China.
By comparison, about a half of current C-Class production is in Bremen, while another third comes from Sindelfingen. The rest is built in South Africa and China.
http://www.reuters.com/article/usDol...=11604&sp=true
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12-04-09, 07:15 AM
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12-04-09, 09:27 AM
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The C classes built in South Africa are all RHD and built for RHD markets such as the United Kingdom or Japan for instance. According to the latest UK owner satisfaction surveys, the W204 C class has been very pleasing. Yes, that's the one built in South Africa.
12-04-09, 09:33 AM
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12-04-09, 09:42 AM
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Mercedes has been producing trucks and buses in South America since the 1960s I believe and the quality control at those facilities appears to be just as good as those in Germany / Austria.
12-04-09, 09:56 AM
#13
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I think Mercedes produces the RHD C class in South Africa primarily because of the cheaper labor costs. The quality seems to be top notch though.
Mercedes has been producing trucks and buses in South America since the 1960s I believe and the quality control at those facilities appears to be just as good as those in Germany / Austria.
Mercedes has been producing trucks and buses in South America since the 1960s I believe and the quality control at those facilities appears to be just as good as those in Germany / Austria.
12-04-09, 10:01 AM
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I completely understand you. In a way I feel the same way. If I were to buy a Mercedes-Benz, a German car, I would expect it to be made in Germany. It adds to the prestige of owning such a vehicle.
However, the changing situations in the global economy mean the decisions like these will be the norm. I've heard that Mercedes plans to produce the C class in the US, China, South Africa and possibly still in Germany. They're simply making intelligent financial decisions and producing where the consumer/market is. Toyota does the same with the Camry for instance. Also, the fact that certain BMW and Mercedes SUVs are built in the USA has not hampered their sales success - even in Europe.
I suppose at the end of the day, the question of where a car is built has become largely irrelevant to most people in this day and age.
12-04-09, 10:15 AM
#15
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^^ In my experience, I would tend to agree with above regarding globalization.
The current gen C-class is a much better car than previous gen due to the engineering effort, reliability and durability testing that was done before release to production.
The current gen C-class is a much better car than previous gen due to the engineering effort, reliability and durability testing that was done before release to production.