Mercedes Benz, it is perhaps the biggest name in luxury cars in the world.
Sure, there are Italian exotics like Lamborghini, stately British brands such as Bentley,
Rolls-Royce and Aston Martin, and plenty of competition in Benz's home country of Germany.
But the German make with the three pointed star logo is for countless buyers around the world.
The brand to aspire to.
It has a reputation for superb build quality and excellent engineering.
It also has an extremely strong pedigree, including bragging rights that its founder, Karl
Benz, invented the world's first production automobile.
Mercedes Benz has been a dominant force in racing, a relentless innovator, a symbol of the
pursuit of excellence no matter the cost, and for its buyers, a sign they have finally made it.
But today, it faces a new class of challenges.
Electric vehicles are coming into the world, pushed by eco conscious policy makers and at least
a few eager buyers.
Tesla has become an aspirational brand for younger consumers, and there is a slew of other EV
hopefuls vying for the mantle of the next generation's aspirational vehicle.
Meanwhile, Mercedes said in February that it will not be offering its electric Oecussi sport utility
vehicle in the U.S.
for now, even though the vehicle has been in production since 2019.
Mercedes Benz has had a magnificent run, but those who study the global auto industry say it is
undergoing one of the most dynamic and uncertain periods in its history just a few years ago.
U.S. auto sales hit historic highs, but automakers have had to sink billions into new technologies
and contend with a new crop of competitors in the key Chinese market and around the world.
Mercedes Benz has been a leader since the birth of the automobile.
What it does now may determine whether it remains a leader.
Mercedes Benz traces its history back to the 30s and to three pivotal figures, Gotlieb, Dimler
Vilhelm, Maibach and Karl Benz, Dimler for whom Mercedes long time parent company is named, was an
engineer who developed the engines that powered the earliest Mercedes cars.
Maibach, whose name now graces a line of ultra luxury cars, was the company's first technical
director. And Karl Benz was the inventor of what is widely considered the first true gasoline
powered, commercially available car.
In addition to that, Benz Dimler and Maibach participated in the world's first known motor
sport event, a 126 kilometer race from Paris to ruin in 1894, organized by a
French newspaper publisher, the event placed steam, gasoline and even battery driven vehicles
side by side.
Nine of the 17 vehicles to cross the finish line had Dimler engines in them, including the first
four to finish the race.
In other words, there are a few brands that can match Mercedes Benz as automotive pedigree.
That first race began one of the richest histories in international motor sport.
Unfortunately, Mercedes Benz left racing four decades after a catastrophic accident in 1955 at
the 24 hours of them on race, a three way crash with a Jaguar and an Austin Heeley centa Mercedes
Benz car flying into the stands.
Somewhere around 80 people died.
Mercedes Benz did not return to racing until 1989.
As of twenty one Mercedes sponsors, one of the most successful Formula One teams in history.
Its drivers have together won seven consecutive double world championship titles, the most ever.
Its innovations in racing, tech and in cars have often seeped into its production vehicles.
The racing program has also produced some iconic vehicles, including the 300 SL with its trademark
Gullwing Doors, the two seater sports car.
It was developed in 1952 and went on to win races at Lehman Burn Nürburgring and the Karara
Panamera.
It was released to the U.S.
public in 1954.
The move was motivated by a U.S.
importer who convinced the company there would be strong demand for the car.
It's track success helped the company form a reputation for superb engineering, quality
materials, innovation and execution.
They've often been first to market with a variety of technologies from being the first arguably the
first car, you know, to things like the first diesel engines in the 1930s, the first fuel
injected engines in the 1950s with the the 300 Essl.
And more recently, a lot of the active safety systems that were the first with an electronic
anti-lock brakes, systems and traction control and stability control systems.
So they they have been a leader throughout their entire history.
Its cars didn't rise to the top by always being the most feature rich or even the most luxurious.
What buyers were paying for was a leaner, simpler car built very, very well.
What you were paying for and what you know, what the customer was happily paying for was the
prestige of having a car that was engineered like no other car in the world.
You were paying for quality.
You were paying for engineering.
And that was the prestige.
It wasn't it wasn't the features.
It wasn't the luxury necessarily.
It was the it was the engineering, that and quality that really form the backbone of that
brand's image.
The company goes to some striking lengths to back up this reputation for attention to detail.
For example, like many other automakers, Mercedes Benz has its own in-house performance tuning
division known as AMG.
AMG began as an independent tuning shop that Mercedes later acquired, but AMG is somewhat
unusual in that engines for many AMG cars are each hand built by a single engineer at a time.
Each engine has a plate etched with the builder's signature.
Whenever we do brand image ranking exercises with consumers without almost without fail, Mercedes
Benz always comes out at the top.
It's always the top, most aspirational brand, even even among people that aren't necessarily
interested in owning a Mercedes Benz themselves.
They still see Mercedes Benz as being at the top.
Of course, not everything has been perfect, while Mercedes is known for excelling in engineering,
they haven't fared as well in assessments of other features, especially electronics and systems
such as the Infotainment Control's.
Mercedes has also struggled with quality control issues.
The brand's reputation began to take hits in the 1990s, and those persisted throughout the early
2000s.
They frankly took their eye off the ball and I think they got little complacent cut costs a lot
and now it takes a long time to.
Turn that around, and they did that.
We have them with that.
They move pretty quickly to rectify these problems and try tried to avoid doing that again
because Yeah, a scientist, cannot afford to lose their reputation for reliability and solidity
without that, that they would struggle.
It has also taken some criticism for its repeated efforts to boost volumes, capture more market
share and lure younger buyers by making less expensive vehicles.
Some of Mercedes Benz efforts in lower priced segments have not exactly been successful.
It's a class sport.
Coupe was one such model introduced in 2002 and discontinued in the U.S.
by 2006.
The company has also at times found itself challenged by some formidable competition.
Its closest rivals or other traditional German makers, specifically BMW and Audi.
BMW has long cultivated a reputation for high performance vehicles, and Audi has distinguished
itself with forward thinking, design and an eye toward tech features.
But other brands have mounted a challenge, too, including Toyota's Lexus brand.
When Lexus was introduced in the United States in 1989, many were skeptical that a high end Toyota
could prove a rival to German makers.
But by 1991, Lexus was the top luxury import in the U.S.,
Going along with the perception that Mercedes is really at the top of the heap.
There's still also the perception that Mercedes Benz is for people who are older, that it's for
old money, that it's for people who have more stately tastes.
And there is absolutely the perception that BMW and Audi are for people who are younger, younger,
affluent people who want to be more sporty and dynamic.
The other concern is that Mercedes sport utility vehicles don't always seem to inspire the same
interest its larger sedans have.
Before the U.S. auto market shifted from mostly traditional passenger cars to SUVs, Mercedes was
consistently one of the top three considered brands.
This is largely because the C.
Class s class and full size E class sedans were typically popular vehicles.
But Mercedes has dipped a bit, in part because its dominant SUV, the glee is similar to the
Lexus are accurate MDX, BMW, X5, X3, or the Audi Q5.
In the U.S. in 2020, BMW took the top spot and sales among luxury brands with two hundred seventy
eight thousand seven hundred thirty two units.
Lexus came in second with two hundred seventy five thousand forty one.
Mercedes, which had been the second place brand and occasionally vied for first place, fell to
third with two hundred seventy four thousand nine hundred sixteen.
To be sure, Mercedes Benz was still the top seller of luxury vehicles globally in fiscal year
2019. Mercedes Benz is then parent.
Daimler saw profits fall by about five dollars billion, due in part to costs from the diesel gate
scandal and heavy investments in electrification.
In twenty twenty one, Daimler spun the Mercedes Benz cars business out of the truck and van
business. Now Mercedes is focusing on investing very heavily in electrification.
Like so many other automakers, key markets like its home market in Europe, the fast growing and
essential market in China and even the U.S.
market are all pushing for electric and hybrid cars.
Part of their engineering excellence has come from taking their time out of doing things and trying
to get it right. First time.
And then we have our competitors like Tesla are moving more quickly on trying things that maybe
some of the traditional automakers wouldn't try.
And we have some consumers want this.
Not all consumers want it.
But there was a lot that that are interested in that younger consumers of it has to move with the
times, not lose on the strengths I have from may become a little more nimble and more modern
in the eyes of younger consumers.
And in that new electric car market, there are brands such as Tesla, which are already beginning
to distinguish themselves.
McKinsey's Electric Vehicle Index shows Tesla increased its global market share in twenty
nineteen, the most recent year available to sixteen percent of the total.
The largest of any one brand BMW had less than six percent and Mercedes didn't make the list.
Tesla and some local Chinese brands are also making headway in China, according to a report
from Piper Sendler.
The three German brands, BMW, Mercedes and Audi have historically controlled sixty percent of that
market. But Tesla, Li Auto and others are on the rise, and Piper's report said things are only
going to get worse.
Bottom line, the report said, whenever Tesla opens a store in a new city.
The Germans lose share, and there are still lots of headroom for opening new stores.
Of course, there are many in the auto industry who think Tesla's future is far from secure.
And so far, electric vehicles comprise a tiny share of total sales in the United States.
So what is the threat posed by new brands?
Definitely significant.
You know, Mercedes Benz obviously is still perceived as extremely prestigious and and it
still enjoys its very top place ranking in terms of aspiration.
But, you know, that can fade over time.
Tesla's Tesla certainly doesn't possess the sort of quality that Mercedes Benz has, but it
does absolutely have innovation.
When you have what you have upstarts like Tesla, you know, all of a sudden owning the space of
innovation and all that, you know, that absolutely threatens a company like a brand like
Mercedes Benz.
Mercedes has delayed the introduction of its Oecussi electric sport utility vehicle in the
United States for now, the company said in February.
But so far, plans to introduce its electric sedan in the U.S.
are on track. And Mercedes says it plans to make AMG versions of at least some of its electric
vehicle lineup, which stand a chance of being more profitable.
The company has also entered into the Formula E electric racing series, showing that it might
still well understand how great automotive reputations are made.