DaimlerChrysler suppliers say it's not accidental that Chairman Jürgen Schrempp's management legacy is under attack -- not only in a US courtroom but also in the marketplace, where Mercedes-Benz's reputation for quality is declining.
Suppliers say that, since Schrempp took over in 1996, Mercedes-Benz has lost its engineering focus and has placed a higher value on cost control. The old maxim that Mercedes over-engineers its cars is seldom heard these days.
Mercedes has fallen behind rival BMW for the first time in the latest member satisfaction survey by the ADAC, the largest German roadside organization. Mercedes-Benz drivers ranked the company No. 32 out of 33 brands scored.
Complaints about Mercedes-Benz quality are not new. Customers have complained that the brand isn't what it used to be at least since the introduction of the W190 in the 1980s.
The brand has been stretched to cover a wide range of products, from the entry-level Vaneo to the McLaren SLR supercar.
The early models for the W124 E class ran into quality problems. The A class tipped over without ESP.
But consumers forgave Mercedes. They had faith that the brand's core engineering values would let the company fix teething problems and deliver cars that were more durable and reliable than its competitors.
But that faith now seems to be ebbing.
The problems are confined to surveys so they haven't hurt sales yet. But as the global luxury market has boomed, Mercedes-Benz has underperformed rivals BMW, Porsche and Lexus.
The problem is more than just poor execution on innovations or a drift from brand values.
The problem is the product: rusting doors in the E class, poor corrosion resistance on the M class; defective airbags on the C, E and S class models and poor electronic reliability.
"Mercedes has an astonishingly large number of problems," says German magazine AutoBild.
What happened? Suppliers say that, since Schrempp took over, Mercedes-Benz has lost its engineering focus and has emphasized cost cutting. Mercedes has reduced over-engineering. The E class was designed to cost 11 percent less than the old model -- and generates half the division's profits, say analysts. But DaimlerChrysler is shifting the profits to support its Chrysler and Mitsubishi brands.
Even the strongest brand can fade when products no longer support the value-for-money proposition that built it originally. Mercedes-Benz must restore its core values if it is to retain its luxury-brand premium position in the long term.
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