Downfall of Mercedes-Benz Quality: Target Costing?

[wik_a]

Salam to all
As we all know that Mercedes-Benz now is unable to produce vehicles which are as good from the aspect of quality as their previous vehicles were.
What is the reason?
Is Target Costing the reason?
I mean how a company that's ruled the world by producing quality vehicles can go down so dramtically?
I don't know much about Overhead costs of Mercedes-Benz but the concept of costing introduced by Japanese have forced them to keep the prices of their vehicles at a market level. They are not able to produce good quality parts for their cars in range of a competitive market price. Previously they used to charge the much they'd incurr on a vechicle plus profit margin. Now they can't do that as competing with Lexus, BMW, Cadillac, Audi etc. requires them to keep their prices equal to other competitors so as to maintain the market share.
As Toyota/Lexus doesn't bear high overhead costs as compared to the other manufacturers by using their techniques like JIT etc. thats why their products are of good quality at a market price.
I guess same problem is being faced by GM as its overhead costs are way too high. By keeping the price at competitive level they're unable to produce best quality parts for their cars.

For those who are not that much fimiliar with Target Costing:
A manufacturing company first sets a price of its product which is almost equal to the price of competitor's equivalent product then deduct its profit margin from the figure. The resulting figure must cover the entire cost of the product. Then it splits that figure to different areas of costs and then produce the components in that set cost. If it fails to do so the price would exceed and it might lose market share ultimately.

Please have a discussion on it and kindly share your views, thinkings and experiences (if any) about this.
Best Regards,

[enigma]

Is this real?

[Qaisrani]

yes ur right. i think good work on mercedes benz

[wik_a]

what real enigma???

[malikg115]

i think u r a student of bba or mba

ur newly learnt topic was Target Costing etc
etc
my dear
someyimes cos need 2 do wat they dont want 2 do

but still they hav with them wat they wanted
i mean Merc is a claSS above,
if they keep this flaG with them then
they r successfuL.
wat they hav done is that many cos due 2 v tough competition hav 2 make joint ventures etc etc
Merc did it w Chrysler
noW is DC
so r they able
2
make their customer still alive or not /?
thats the matter with them ?
r they having customers
r their customers happY with at Merc is introducing day by day ?
etc etc
find answers 2 these then

u can finalize about them, ok?

u can find many things like

a reXton jeep is proud 2 use Merc T Gear BoX sys, after havcing license (allow) from them,
so how much far away is Merc from this KoreaN Jiant
it ll tell u about MerC and their placE

[wik_a]

@malik
firstly i'm doing neither bba nor mba.
secondly the focus of my thread is not to discuss that did mercedes lose its customers while adopting this technique or not. I'm more concerned about quality which the subject of this thread yelling quite loudly.
Mercedes has got a good reputation but what abt its quality. Reputation can't confirm you the best quality product.
Brand Loyalty is something different. Its all about the marketing strategies. how well you market your product though its faulty but faults can't be removed from a product by marketing it well.
So if Mercedes-Benz products are not that much good then why is that so?
This is what i wanna discuss here.
Thnx for your contribution.
I look forward to more.
Best Regards,

[toofast]

I agree with you wik about target costing. I have to add one more thing which is the new ownership. In my view Benz quality went down hill since chrysler took over. Japs have low cost because of cheap labour,jit etc on the other side chrysler and GM have to pay average 10$ an hour + medical benefits because of labour union. I do not remember where i read that US car manufactures have more profit margin than Japs. Japs have less cost of manufacturing. Go figure the quality.

[wik_a]

yup you're right.
GM has got very high labour overhead costs. pensions, medical benefits so on and so forth...thats huge.
$1500 is added to the cost of each vehicle produced by GM under the head of Health and Safety OH cost.
Japs don't have unions and stuff.
The profit margin thing is new to me. Thanx for that.

[levin]

In general labour costs are increasing( including Japan)that was one of the reason Japanese companies are installing plants in countries with cheaper labour costs.

Another point is all companies reach a point of maturity, including Benz, and now new strategies are needed to keep up with the competition,, this is nothing to do with quality of product,, its more to do with retaining a required profit margin. I have observed Benz has plans to install manufacturing plants in countries where labour cost is less.

Another point is Toyota has waited many years before they launched a product to compete with Benz and other German products after years of analysis of their products.

I feel Benz is still busy trying to penetrate into another type of market as i have seen diffirent kind of tests and analysis in totally new field as compared to your typical Mercedes Benz product.

[Storm]

As a long time merc owner i can back up wik_a's claim. old 126's and 123's are still running hard after millions of miles in the harshest environments, whilst the 140's and 124's are dying all the time.

DC should realise what they are doing to a premium brand before it's too late.

[alphaX]

Also...Daimler merging with Chrysler does not help their case either. Chrylser is known to make crappy cars like GM and Ford. Not too sure if that really has anything to do with it..but it sure is annoying ....and tarnishes the image of the Benz.

[Storm]

best example of MB using inferior parts is how they have taken a chrysler pacifica and rebadged it as the new R-Klasse, or the crossfire being based the old R170 SLK. Seems like chrysler is getting the better deal with the merger.

[alphaX]

Of course Chrysler is getting the better deal..the 300M is using the old E class chassis with the same engine that powers the E350. Mercedes R class is the re-badged Chrysler Pacifica. You see similar interior in Chryslers that you do in Mercedes. So if some one loves Merc engineering and does not care about the badge...they got a great deal with Chrysler.

[portage1]

You can say that again....................

[portage1]

I got a meeting with Mercedes benz of north America and I am going to inform them you not happy with company,and they better give you a AMG to quite you down............LMAO

[system]

@alpha x
Bhai, how u can say that
Gm and ford are making crappy cars. Their cars ans Suv's are far more reliable then they used to be 5 years ago. They are trying their best to close the quality gap because they know that if they dont, they will be completly cornered by toyota and honda.
their cars are still better than those eupropean cars.
I have a 2001 Ford Taurus with 154k km on it. I never had any problem with this car. paid 6300(5300+15%T+other cost).

[datzburier]

Very good discussion.

Mercedez has been going down the hill during the last 10 years or so, mainly due to high costs. You can see their attempts to relocate to 3rd world countries to save the costs. Who could have thought, they would be making cars in INDIA.

Did any other Luxury maker of the world ever thought of doing that, NO. No Cadillac, BMW, Porche, Rolls Royce has ever rolled off an assembly line of any 3rd world country (except China, and in case of China, many of its Industrial sectors are at par with Europeans and Americans), But look at Mercedez, first they went to merge with Chrysler, a 3rd rate, firm that almost failed during early 1990s, then they went to make cars in 3rd world countries. They even have an assembly plant in Egypt.

They have realized the higher costs (in Germany) are their biggest weakness. So, may be, Germans may not be too crazy to relocate to 3rd world countries afterall. But are they compromising on their quality as well, while relocating to 3rd world countries like Egypt and India. That is up for debate.

[alphaX]

Adnan1....man...Im happy your ford is going good for you..GREAT!!! Buy another Ford

Protage1....please do that. E63..if they must know

[system]

yes, i am happy with ford and my next purchase will be a ford Expedition or a Cherolet Tahoe. Love those Suv's man. enormous power, gigantic size and safe.

[system]

Datz Bhai, Despite their(Bmw,Mercs)low quality, their customers are still brand loyal. But my guess is that if they dont maintain their reliability and improve the electronics in thier cars, Lexus and Acura are going to corner them because even though Bm,Mers customer are brand loyal, still they dont want to go back to dealer ships again and again for stupid electrical problems as most of those people are busy and rich.