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Mercedes will make engine lines more flexible

BERLIN -- Mercedes-Benz wants to establish a so-called "agile production" system in its engine assembly operations, production and purchasing boss Andreas Renschler said.

"Though we are producing the four- and six-cylinder versions of diesel and gasoline engines on separate lines so far, we will be able to manufacture all four variations of the next generation on one line," he told the Automobilwoche Congress last week.

A capacity-driven ramp up is a key attribute of this new production philosophy. Whatever the variant, production can be increased in stages with the installation of additional equipment modules, he said.

"This reduces our investment," he said. "We are now building a preliminary system for the agile production systems – a kind of large-scale pilot project – in our new engine plant in China."

The 400-million euro factory, opened this week, is the first outside Germany to make engines for Mercedes passenger cars.

'Good products not enough'

The Daimler subsidiary aims to be regain the crown as the world's top-selling premium carmaker by 2020. It lost its lead to BMW in 2005 and slipped to third behind Audi in 2011. To get back to the top, Renschler said Mercedes is changing its entire production philosophy.

"Good products are not enough for success," he said, adding that the key is balancing complexity and costs.

Renschler will have to reduce costs at Mercedes.

In his view, a number of challenges are emerging: Automakers have to build up massive capacity in the different regions and strengthen local purchasing so they can meet the demand overseas. But at the same time, market fluctuations are a constant challenge.

Product diversity is also rising and detailed sales planning is becoming more and more difficult.

"Inflexible production is increasingly turning into Russian roulette – especially in the premium segment where the volumes are lower and the diversity of models and derivatives is greater," Renschler said.

That is why he wants to adjust Mercedes' production philosophy. At the same time, the Stuttgart automaker is expanding its capacity in growth markets and is using its regular factories in Germany to support the ramp up of foreign production and ensure high quality standards.

He cited the production arrangement for the new C class that is due to launch next spring as an example. The BMW 3-series rival will be launched simultaneously at four locations: Germany; South Africa, the United States and China.

You can reach Matthias Krust at mkrust@craincom.de

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