Daimler Doesn't Expect Quick U.S. Recovery
November 13, 2009
Dieter Zetsche, Daimler AG chairman and head of the German automaker's Mercedes-Benz passenger-car division, said yesterday in a media conference in New York that it "remains to be seen" if the U.S. economy really is improving, adding that "there is some (economic) data causing concern."
He said Daimler instead is banking on growth in China and some Latin America markets.
"I do believe the U.S. market will come back to former volumes," Zetsche said, adding, however, the company does not think it will happen until 2012 or 2013.
"There is one country where we haven't seen any retraction," he said. "This country is China." Zetsche said China soon will be the third-largest market for Mercedes-Benz - and already is the world's largest market for the company's S-Class flagship.
Zetsche also pointed to some Latin America markets as remaining resilient. "Brazil has come through this crisis in a surprisingly positive way."
Improving In U.S. Market Will Take Work
Although being candid about the fact the company understands there is a changing dynamic for luxury segments in the U.S. - and that the shift will require premium brands to reevaluate and adjust - Zetsche circled cautiously around questions about the drastic plunge of fortunes for its smart small-car brand. The small-car division moved just 661 cars in the U.S. in October - a 70.4-percent dive from last October (in smart's inaugural year in the U.S. market).
Through October, smart had sold just more than 13,000 units, a 35.8-percent slide from last year, and many are questioning if the niche brand already has seen the extent of the market appeal for 2-seat subcompact city cars.
But Zetsche said there is a future for the car in the U.S. He said a new car-sharing pilot program - dubbed car2go - in Austin, Texas, is similar to a car-share project already initiated in Germany and could indicate one new option for the tiny cars.
And although Mercedes has no plans to sell the current A-Class subcompact in the U.S., Zetsche said the next-generation A-Class will offer four different propulsion options, from diesel to full-electric, and that one or more of the alternative-drive models could be "well-suited" for the U.S. Mercedes has indicated its direction for the next A-Class with several recent "Bluezero" concept cars.
Diesel will continue to expand for the U.S. market, too, Zetsche said, but because of the different fuel-price and tax structure in the U.S., diesel penetration rates won't approach the 50-percent or more of the European light-vehicle market, where diesel use is incentivized by a variety of methods.
Zetsche also said there probably will be the potential for increasing use of 4-cylinder engines in the U.S. To now, Mercedes and other premium makers have been roughed up by buyers whenever 4-cylinder models were presented in U.S. showrooms.
But Zetsche said as long as 4-cylinder engines can deliver the performance customers expect when spending luxury-brand money, 4-cylinder engines might be somewhat more welcome in light of the increasing attention to sustainability and fuel economy. He said diesels, with their inherent high torque that bolsters performance, are the likely option to improve the perception of 4-cylinder engines in luxury models.
Dollar Vs. Euro
Perhaps most intriguingly, Zetsche said the dollar's continuing weakness has the company thinking about manufacturing options.
Although he did not directly say Mercedes is considering expanding production in the U.S. (it currently makes the M-Class, R-Class and GL-Class utility vehicles at Mercedes-Benz U.S. International in Tuscaloosa, AL), he did say "the decision for the new C-Class has to be made," apparently because margins for the C-Class - the entry point for Mercedes in the U.S. market - almost certainly already are marginal. - Bill Visnic, senior contributing editor
Photos courtesy Mercedes-Benz USA
1. Dieter Zetsche, chairman and head of Mercedes-Benz passenger cars.
2. Fortunes of smart have dropped precipitously in recent months.
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