At Mercedes-Benz, sales are up, profits are down and a proliferation of new models has put the brand on the cusp of overtaking BMW as the world’s No. 1 luxury brand. Other than a slide in profits, Merc has much to celebrate.
The Mercedes GLA is a perfect example of the brand’s strategy to expand into new market segments.
So here is the bad news: emerging concern that Mercedes and its parent Daimler AG could get caught up in the sort of emissions scandal that is dragging down fellow German automaker Volkswagen AG.
Here’s the question, then: What is Mercedes? Juggernaut or juggling act?
We know this for certain: in Canada, the leadership of the operation has been a three-ring circus – three CEOs in about as many months. In fairness, there does now appear to be stability at the top with the arrival of career finance executive Brian Fulton as the new head of the Canadian sales operation on May 1.
Brian Fulton, the new Mercedes-Benz Canada president and CEO — the third one in almost as many months.
He succeeds Gareth Joyce whose short term ended just months after he took over from Tim Reuss at the start of the year. It’s noteworthy that in the previous decade or more, Mercedes Canada had just two CEOs. This latest bit of rapid leadership change is, therefore, highly unusual.
That said, a tsunami of new models is driving sales in Canada and around the globe to unprecedented levels. Mercedes brand car and truck sales were up 13.1 per cent for the first quarter (smart was up 284 per cent, too). That tops BMW’s increase of 12.2 per cent for the same period, but seriously lags Audi’s 25.4 per cent gain, as DesRosiers Automotive Consultants reports.
The new GLE/M-Class is a clear hit, while additional AMG offerings have pumped up sales of the performance sub-brand by a whopping 213 per cent year-to-date, says the company.
The GLE SUV exemplifies Mercedes’ focus on diesels, all-wheel drive technology.
Diesel sales in Canada have also been strong, with 62.9 per cent of Canadian Merc buyers going diesel. And virtually every Mercedes buyer in Canada (94.6 per cent) is driving off the lot in a vehicle with Merc’s all-wheel drive 4MATIC system.
Globally, Bloomberg notes that Mercedes-Benz boosted sales twice as fast as BMW and more than three times as fast as Audi in the first quarter. Mercedes has long said it wants to surpass BMW as the No. 1 luxury maker in the world by 2020. At this rate Merc may pass BMW much sooner.
The affordable B 250 4MATIC.
Daimler’s luxury brand sales soared 13 percent worldwide to 483,487 vehicles through March. BMW sales were up just 6.0 per cent to 478,743 and Audi’s rose 4.0 per cent to 455,750.
Why the explosive growth? Mercedes has put particular emphasis on moving down-market into Honda Accord-price territory — expanding into relatively affordable segments with vehicles such as the CLA and B-Class. And a savvy SUV strategy is loaded with new models, from the latest GLE to less expensive rigs such as the GLA and GLC. The product barrage has created unprecedented action in Mercedes showrooms around the world.
Yet for all the sales success, Daimler’s net profit fell 32 per cent to €1.4 billion for the first quarter. The cost of Merc’s new-model blitz and currency headwinds are apparently battering the bottom line. Indeed, even strong sales in China could not drive Daimler to better profits.
Mercedes-AMG C 63 S Coupe: hot performance and high style.
More worrisome still for Daimler is the revelation that the U.S. Justice Department has prompted Daimler to review its emissions certification process. Reuters reports that CFO Bodo Uebber says the company is cooperating and left it at that.
Make no mistake, though, Daimler will eventually offer further comment. At least one lawsuit is pending and U.S. regulators have proven to be dogged in their pursuit of anything with a whiff of a diesel scandal.
The truth is, diesel emissions cheating by VW has cast a dark cloud over diesels of all sorts. Six months after the U.S. Environmental Protection Agency said it would review all light-duty diesels sold in the U.S., news outlets around the globe keep pumping out diesel-related stories.
VW, of course, has reached a tentative agreement with authorities to fix or compensate owners of its diesels – diesels that since 2009 used a software cheat that allowed them to pass emissions tests while emitting up to 40 times the legally allowable pollution, notes Reuters.
Despite the progress made in the U.S. and Canada, VW has yet to deal with its diesel scandal on a complete and global basis. Various authorities, private groups and individuals are pursuing legal action against VW. Indeed, Bloomberg estimates that the cost to VW of addressing the diesel catastrophe could reach as high as $40 billion (US) or more.
As for Daimler, the U.S. Environmental Protection Agency said in February it had requested information from the automaker in light of a lawsuit filed by U.S. Mercedes owners, but had not opened an official investigation. In what some think is an ominous sign – though others consider it a sleazy attempt to bleed Daimler in light of the VW mess — owners of U.S. Mercedes diesel cars filed a new class action. It says Mercedes vehicles, notes Reuters, likely contained a “defeat device” used to cheat emissions testing.
Daimler denies all such charges, saying the lawsuits “are considered to be without merit and Daimler will defend itself against them with all available legal means.”
Nonetheless, in the current climate even a hint of a diesel scandal is troubling. As Reuters reports, the law firm Hagens Berman says new tests show that Mercedes BlueTEC cars produced nitrogen oxide emissions in virtually all road tests that were far higher than in controlled lab tests.
“The fact that Mercedes passed the dynamometer test in all tests, but failed the real world test, is suggestive that like VW, Mercedes is implementing a ‘defeat device’,” it said in its complaint filed in New Jersey.
BlueTEC is Daimler’s diesel exhaust cleansing system. It employs urea to deal with nitric oxides and advanced filters to control diesel particulates. BlueTEC requires regular maintenance to function properly, but has been touted as an effective way to manage diesel emissions, reducing them to gasoline car-like levels. Mercedes diesels sold in Canada employ the BlueTEC system.
Mercedes-Benz is well on the way to becoming the world’s top luxury brand, but the road ahead has potholes. Perhaps it’s fair to call Daimler and its Mercedes brand the juggling juggernaut roaring down a road littered with challenges that could send it into the ditch.
At Mercedes-Benz, sales are up, profits are down and a proliferation of new models has put the brand on the cusp of overtaking BMW as the world’s No. 1 luxury brand. Other than a slide in profits, Merc has much to celebrate.
The Mercedes GLA is a perfect example of the brand’s strategy to expand into new market segments.
So here is the bad news: emerging concern that Mercedes and its parent Daimler AG could get caught up in the sort of emissions scandal that is dragging down fellow German automaker Volkswagen AG.
Here’s the question, then: What is Mercedes? Juggernaut or juggling act?
We know this for certain: in Canada, the leadership of the operation has been a three-ring circus – three CEOs in about as many months. In fairness, there does now appear to be stability at the top with the arrival of career finance executive Brian Fulton as the new head of the Canadian sales operation on May 1.
Brian Fulton, the new Mercedes-Benz Canada president and CEO — the third one in almost as many months.
He succeeds Gareth Joyce whose short term ended just months after he took over from Tim Reuss at the start of the year. It’s noteworthy that in the previous decade or more, Mercedes Canada had just two CEOs. This latest bit of rapid leadership change is, therefore, highly unusual.
That said, a tsunami of new models is driving sales in Canada and around the globe to unprecedented levels. Mercedes brand car and truck sales were up 13.1 per cent for the first quarter (smart was up 284 per cent, too). That tops BMW’s increase of 12.2 per cent for the same period, but seriously lags Audi’s 25.4 per cent gain, as DesRosiers Automotive Consultants reports.
The new GLE/M-Class is a clear hit, while additional AMG offerings have pumped up sales of the performance sub-brand by a whopping 213 per cent year-to-date, says the company.
The GLE SUV exemplifies Mercedes’ focus on diesels, all-wheel drive technology.
Diesel sales in Canada have also been strong, with 62.9 per cent of Canadian Merc buyers going diesel. And virtually every Mercedes buyer in Canada (94.6 per cent) is driving off the lot in a vehicle with Merc’s all-wheel drive 4MATIC system.
Globally, Bloomberg notes that Mercedes-Benz boosted sales twice as fast as BMW and more than three times as fast as Audi in the first quarter. Mercedes has long said it wants to surpass BMW as the No. 1 luxury maker in the world by 2020. At this rate Merc may pass BMW much sooner.
The affordable B 250 4MATIC.
Daimler’s luxury brand sales soared 13 percent worldwide to 483,487 vehicles through March. BMW sales were up just 6.0 per cent to 478,743 and Audi’s rose 4.0 per cent to 455,750.
Why the explosive growth? Mercedes has put particular emphasis on moving down-market into Honda Accord-price territory — expanding into relatively affordable segments with vehicles such as the CLA and B-Class. And a savvy SUV strategy is loaded with new models, from the latest GLE to less expensive rigs such as the GLA and GLC. The product barrage has created unprecedented action in Mercedes showrooms around the world.
Yet for all the sales success, Daimler’s net profit fell 32 per cent to €1.4 billion for the first quarter. The cost of Merc’s new-model blitz and currency headwinds are apparently battering the bottom line. Indeed, even strong sales in China could not drive Daimler to better profits.
Mercedes-AMG C 63 S Coupe: hot performance and high style.
More worrisome still for Daimler is the revelation that the U.S. Justice Department has prompted Daimler to review its emissions certification process. Reuters reports that CFO Bodo Uebber says the company is cooperating and left it at that.
Make no mistake, though, Daimler will eventually offer further comment. At least one lawsuit is pending and U.S. regulators have proven to be dogged in their pursuit of anything with a whiff of a diesel scandal.
The truth is, diesel emissions cheating by VW has cast a dark cloud over diesels of all sorts. Six months after the U.S. Environmental Protection Agency said it would review all light-duty diesels sold in the U.S., news outlets around the globe keep pumping out diesel-related stories.
VW, of course, has reached a tentative agreement with authorities to fix or compensate owners of its diesels – diesels that since 2009 used a software cheat that allowed them to pass emissions tests while emitting up to 40 times the legally allowable pollution, notes Reuters.
Despite the progress made in the U.S. and Canada, VW has yet to deal with its diesel scandal on a complete and global basis. Various authorities, private groups and individuals are pursuing legal action against VW. Indeed, Bloomberg estimates that the cost to VW of addressing the diesel catastrophe could reach as high as $40 billion (US) or more.
As for Daimler, the U.S. Environmental Protection Agency said in February it had requested information from the automaker in light of a lawsuit filed by U.S. Mercedes owners, but had not opened an official investigation. In what some think is an ominous sign – though others consider it a sleazy attempt to bleed Daimler in light of the VW mess — owners of U.S. Mercedes diesel cars filed a new class action. It says Mercedes vehicles, notes Reuters, likely contained a “defeat device” used to cheat emissions testing.
Daimler denies all such charges, saying the lawsuits “are considered to be without merit and Daimler will defend itself against them with all available legal means.”
Nonetheless, in the current climate even a hint of a diesel scandal is troubling. As Reuters reports, the law firm Hagens Berman says new tests show that Mercedes BlueTEC cars produced nitrogen oxide emissions in virtually all road tests that were far higher than in controlled lab tests.
“The fact that Mercedes passed the dynamometer test in all tests, but failed the real world test, is suggestive that like VW, Mercedes is implementing a ‘defeat device’,” it said in its complaint filed in New Jersey.
BlueTEC is Daimler’s diesel exhaust cleansing system. It employs urea to deal with nitric oxides and advanced filters to control diesel particulates. BlueTEC requires regular maintenance to function properly, but has been touted as an effective way to manage diesel emissions, reducing them to gasoline car-like levels. Mercedes diesels sold in Canada employ the BlueTEC system.
Mercedes-Benz is well on the way to becoming the world’s top luxury brand, but the road ahead has potholes. Perhaps it’s fair to call Daimler and its Mercedes brand the juggling juggernaut roaring down a road littered with challenges that could send it into the ditch.
About the Author / Jeremy Cato
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