The latest official reports show that the Daimler group had its sales performance affected by the semiconductor shortage. Nevertheless, it has invested in the release of several important cars, such as luxury ones for the Maybach brand and electric ones for the EQ line, and remains optimist for the next months. If you want to know the reason for such attitude, we can mention two main ones.
One is pure and simple logistics; it is about understanding how the supply is coming these days and how much of it each production line consumes. The other is actually having many production lines with which to juggle things. Mercedes-Benz has been one of the largest carmakers in the world for a long time and it makes sure to employ all that experience to develop unique business strategies.
The following paragraphs are going to show you three of those strategies. While the company uses a different combination of them in each opportunity, the truth is that they are completely different and, as a result, yield diverse results as well. Learning about them will allow you to understand not only Mercedes-Benz’s actions, but also a bit more of the car industry as a whole. Let’s take a look!
Selective badge engineering
The simplest strategy of those is also the one of the narrowest scope. Badge engineering consists of deriving a new car model from an existing one by working primarily on superficial components. By definition, simply swapping logotypes would be enough; what companies do in practice is to change some visual parts to adapt the car to its own image, especially when it comes from another maker.
The reason why companies voluntarily go that extra mile is market demand. Each one invests more and more in creating an identity for its vehicles; basically, it makes them stand out in the crowd and preserves their clientele. Taking a car from a competitor and simply selling it as their own would be as natural as going to someone’s house and ask to take one of their children to raise as your own.
The most notable partnerships Mercedes-Benz has established with other carmakers over the past few years occurred with the Chrysler group, which created DaimlerChrysler, and with the Renault-Nissan group, this one with smaller joint operations. The following paragraphs comment on all the badge-engineered models created under those partnerships as well as some other internal cases.
Mercedes-Benz V-Class
Mercedes-Benz currently uses badge engineering on its vans. The midsize commercial van is named Vito in the no-frills variations, including the cargo ones, but that only happens in Europe; the same van is named Metris in North America. The luxury variations, only available in Europe, are named V-Class. The brand new fully electric model, in turn, was named EQV to follow the latest convention.
Mercedes-Benz Citan
Another interesting example is the Citan, which has always been derived from the Renault Kangoo because of Daimler’s partnership with the Renault-Nissan Alliance. In that case, Mercedes-Benz has always done an extensive job to visually differentiate both vans: the Citan’s front end, for example, uses the same stylistic elements seen on traditional models such as the C-Class and the E-Class.
Older models
Some years ago, the same partnership spawned the X-Class, a pickup truck derived from the same project of the Nissan Navara and the Renault Alaskan. The full-size Sprinter has also been rebadged as two Volkswagen models, the Crafter and the LT, and offered under the Freightliner brand only in North America — the latter is still on sale but being phased out in favor of the Mercedes-Benz brand.
Regionalized production lines
Every big automaker eventually installs factories in multiple countries. The different fiscal and labor policies help them financially, the creation of new job positions boosts their image for the local society, and there is a chance of cutting operational costs by applying smart logistics: if a certain car model sells particularly well in a certain region, it pays off to concentrate its production lines there.
When it comes to Mercedes-Benz, we have to keep in mind that it is a luxury brand; it does not sell millions of vehicles every year because its market is not that large. Another specific characteristic is that several cars have unique manufacturing processes. The AMG division, for example, has a “one man, one engine” policy where each engine is signed by the engineer who oversaw its production.
As a result, most of its factories receive knocked-down kits, that is, completed parts which are only assembled on site. That strategy allows the automaker to build smaller factories and easily adapt them to upcoming cars. Both points boost its operational flexibility, which is an essential quality to stay competitive in a market which is flooded with new products and technologies year after year.
Mercedes-Benz U.S. International
One of the company’s largest factories outside Germany is based in Tuscaloosa, Alabama. Since the local society has a strong preference for large cars in general, Mercedes-Benz produces SUVs there: the midsize GLE in regular and Coupé body styles and the full-size GLS in regular and Maybach trim levels. However, the outgoing generation of the C-Class lineup (W205) was also produced there.
Mercedes-Benz México
The country has become a major supplier for the North American automotive market as a whole, so it is not surprising that many Daimler models come from there. Some cars and buses are completely built with local parts while others are only assembled there from completely or semi-knocked down kits whether only with imported parts or with a combination of imported and locally-sourced ones.
Beijing Benz
The company works through a joint-venture with a local company, as local regulation demands, and produces several models from Classes A to E. This is particularly important because it includes the EQC, one of the first models developed for the EQ lineup, and the long-wheelbase variations of the A and E-Class which were created exclusively to suit the Chinese preference (more on that below).
Customization in multiple ways
When it comes to cars, this topic is usually associated to coachbuilding or tuning depending on the context. In short, the former is the practice of buying a rolling chassis from the manufacturer, then having another company design the entire body that will equip it. The latter consists of modifying a specific car to improve its performance and/or simply adapt its design to the owner’s preferences.
We can say that Mercedes-Benz works on both fronts to some extent. The Manufaktur division was released not long ago and offers a unique selection of components and accessories to be altered or added to the base car. The AMG brand, in turn, promotes a complete reinvention of the car focused on improving its entire driving experience, from retouched appearance to optimized brake systems.
As if that was not enough, the carmaker invests in customization in yet another way. It is common for some regions to have specific preferences, such as large cars in the USA, sporty design in Brazil, or microcars in Japan. Mercedes-Benz makes sure to consider all those and does its best to adapt its product lineup to each one of them. Let’s take a closer look at those three examples, shall we?
Mercedes Manufaktur
Selected models are now eligible to receive exclusive options of upholstery, body paint, and extra accessories. The Manufaktur division offers a much wider spectrum of colors and materials for you to customize your Mercedes according to a theme or simply to suit your preferences even further. The new items were designed to fully match the car’s identity even if it is an AMG or a Maybach.
Mercedes-AMG
We all know that name from the performance versions of regular Mercedes cars. What makes AMG stand out are other features, such as assigning engineers to hand-build some of its specific engines from beginning to end (and signing them afterwards) and developing occasional models on its own: the SL roadster, for example, had its latest iteration entirely developed by the performance brand.
Regional preferences
Not all models are available in all countries. North America, for example, typically gets sedans and SUVs of midsize and full-size categories while Latin America tends to focus on small and midsize. In China, the specific preference for long sedans has encouraged the maker to create long-wheelbase variations even for the A-Class and the C-Class, both following the same overall design guidelines.
Why is that important?
First of all, diversifying the lineup is a great way to boost sales for a very simple reason: the more options you offer, the more buyers you can attract. Not all of them become top sellers, of course, but it is possible to work with modular design to optimize the necessary time and money to develop a new product and, as a result, make that variety happen without incurring in financial problems.
Secondly, making the effort to research what customers want and actually working to offer it shows real concern with them. The SL, for example, has just received a new generation in spite of a recent sales decrease because it has always had a strong reputation– we are talking about a 70-year-old nameplate. It is unlikely for the automaker to drop a model once it has made a name in the market.
Last, but not least, bold product releases often lead to a sales boost. The 190 E helped create the entry-luxury segment back in the 1980s, while the ML-Class was one of the first modern SUVs in this portion of the market. In the following decade, the CLS introduced the four-door coupé body, which has been used by many other models ever since, and helped bring back the shooting brake.
Has this strategy always worked?
Not at all. Venturing into uncharted territories like that is risky because there are many sources of problems. The new product may arrive at the wrong time, may come too expensive for what people wanted, may be underpowered for its category, may succumb to an unfavorable economic scenario or people may simply not like it. Mercedes-Benz has surely gone through some of those situations.
Over the past years, the R-Class failed for being too expensive and not quite following the concept of crossover which was a trend back in the 2000s; the A-Class would only prosper after the maker switched its minivan style for a hot-hatchback one; and the X-Class pickup never took off mostly for being too generalist to deserve the Mercedes-Benz badge — it was derived from the Nissan Frontier.
Fortunately, all those mishaps served as learning opportunities for the automaker. The R-Class was replaced by the GL, which helped found the current complete SUV lineup; the A-Class has spawned a whole family of compact performance-oriented models; and the X-Class showed that it would be better for Mercedes-Benz to focus its partnership with Renault-Nissan on the Citan small multivan.
Those actions are only a symbol of what resources Mercedes-Benz uses to handle the fluctuation of market demands, the necessity to preserve its financial health, and deal with any unforeseen issues that may appear. What other interesting facts do you know about this company? Whether they are about the car, van, truck or race divisions, please share them with us using the comment button!
