Weak Dollar could bring Mercedes C-Class production to U.S.

[cawimmer430]

REPORT: Sagging SUV sales, weak dollar could bring Mercedes C-class production to U.S.



Over the past two years, sales of SUVs from virtually all automakers have sagged deeply as fuel prices have risen and the economy has gone into the dumper. Mercedes-Benz is no exception, as sales of its ML, GL and R-class have dropped from a combined 152,500 in 2008 to just over 83,000 so far this year. At the same time, the U.S. dollar has lost significant value against most world currencies, including the Euro. The declining dollar makes it increasingly difficult for companies importing cars to the U.S. to make a profit, especially on low end models.

For Mercedes, this may be the perfect time to shift some production of its smallest model currently offered in the U.S. to its American plant, the sole global source of the aforementioned SUVs. The plant in Vance, Alabama could soon add production of the C-Class which is also the company's top seller in this market. At a media briefing in New York Thursday, CEO Dieter Zetsche acknowledged that a decision on U.S. production of the C-Class would be made soon. If it happens, it will give Mercedes a significant cost advantage on those cars. That cost advantage could allow Mercedes to reintroduce smaller, four-cylinder engines in the C, which is currently only offered with a V6 in the U.S.


Link: http://www.autoblog.com/2009/11/13/report-sagging-suv-sales-weak-dollar-could-bring-mercedes-c-cl/

[NomisR]

I do not want to pay import prices for a premium brand when it's not actually imported.. But i'd probably never get a Mercedes Cheap Class anyways so ..

[Colonel Cadillac]

I do not want to pay import prices for a premium brand when it's not actually imported.. But i'd probably never get a Mercedes Cheap Class anyways so ..

They'll drop the price along with the move to make it more competitive.

[TBR]

They'll drop the price along with the move to make it more competitive.

The price is actually fairly reasonable compared to Audi or BMW. A little bit more pricey than Infiniti for sure though.

[NomisR]

They'll drop the price along with the move to make it more competitive.

No they won't... look at the US made SUVs.. it's just added profit.  It's the same thing with Audis built and sold in China, they just sold it at premium prices at a much cheaper cost.. I guess it's cheaper than the imported version but still way too expensive.

[GoCougs]

Yep, that it may drop cost to produce doesn't equate to a drop is sales price; cost doesn't drive price, demand does.

As to the strategy itself I'd doubt it - what happens should the dollar rise again; pay to move manufacturing elsewhere in a few years?

[NomisR]

Yep, that it may drop cost to produce doesn't equate to a drop is sales price; cost doesn't drive price, demand does.

As to the strategy itself I'd doubt it - what happens should the dollar rise again; pay to move manufacturing elsewhere in a few years?

Yeah, the sunk cost for starting a new factory in the US would be too great to transfer production to another market.  Although there's still savings from production in the US as US is still currently the biggest global market for automobile consumption and the reduction in transportation cost and duty cost would still be significant when the value of the US$ goes up.

[Madman]

C Class production in the US has been confirmed.

http://www.motorauthority.com/blog/1038398_official-mercedes-benz-will-build-c-class-in-u-s


Cheers,
Madman of the People

[TBR]

Perhaps I'll actually stop at the plant tomorrow. I see it every time I go to Texas but I am always rushing to get home.

[cozmik]

Not a bad thing for Mercedes. Manufacturing in market allows for more predictable costs and profits from a business sense. It may allow them to re-content or lower the price some (I'd bet on added content). If a vehicle is custom ordered the wait times should be less as well. Very few customers will care that the car is made in the US now instead of Germany, as long as the build quality is the same or better. We'll probably see more companies localizing production closer to the markets where they product is sold, especially as transport costs rise.

I wouldn't be surprised if we see A4s coming out of the new VW factory in TN once it's up and running as well.

[Vinsanity]

That cost advantage could allow Mercedes to reintroduce smaller, four-cylinder engines in the C, which is currently only offered with a V6 in the U.S.

That's actually an interesting idea. I wouldn't mind a C250 CDI if I had a long commute, and building it in America would potentially be a win-win for everybody (provided that there aren't any quality mis-steps *cough* 1st gen M-class *cough*)

[cawimmer430]

RHD W204 C-Classes are already being made in South Africa for RHD markets like Japan, the UK etc. and their quality has been rated as top notch. A few months ago there was a owner satisfaction survey in the UK where the C-Class (W204) did extremely well. All of them (if they're RHD) were made in South Africa, not Germany.

The current M-Class is also pretty good from a quality POV so I am not to worried about the production facility in the US. MB learned their lesson from the first M-Class (W163).