Mercedes-Benz CEO Warns of Supply Disruptions
Anchor, Worldwide Exchange
Supply disruptions haven’t affected luxury car manufacturer Mercedes-Benz yet, but they are possible down the road, warned Ernst Lieb, the automaker's U.S. CEO, in an interview on CNBC’s “Worldwide Exchange.”
Lieb responded specifically to concerns of supply disruption in Japan post-earthquake, saying that, “It looks like most of our supply is not coming from that region, so it didn’t affect us yet.”
The German car company, owned by Daimler AG, has manufacturing suppliers throughout Europe. But, Lieb said, that doesn’t mean they’re necessarily safe from disruptions. “Some of our colleagues out there are seeing issues now in the pipelines. But probably in April, we'll see the effect.”
Rather than serving as a competitive advantage, Lieb pointed out that Mercedes will not be able to capitalize on supply disruptions that might befall its rivals, particularly Honda , Nissan , and Toyota in Japan, which may have problems with production and selling to the U.S. market.
“If you change your production schedule, you need two or three months lead time,” he said.
“It’s impossible to take advantage of it.” The company’s targets for the month of March and April are already fixed and underway. “In terms of volume, I don't think we'll see much of a change in our strategy there. We need lead time to do that.”
Shifting Gears to Become “Car of the People”
It’s been a good year, so far, for Mercedes-Benz. U.S. sales rose 5 percent, and the company reported the highest February volume since 2008.
The company has begun a campaign to revamp its image, from a luxury dealer to a car for the people. Part of the strategy is to gear the C-Class model toward a younger generation of drivers.
The C-Class is a popular, more affordable line, but Lieb said the decision to push the car into the limelight isn’t about getting out of the recession—it’s an overall market strategy. The C-Class is second only to the BMW 3-Series, with 14 percent market share in this segment.
Lieb said Mercedes-Benz hopes to expand U.S. growth significantly in the next two or three years, with much of that growth targeted toward cars in the C-Class style. The dealer has plans to unveil a C-Class coupe, to be shown first in New York, in the beginning of April, and then in Europe and Asia in the next two to three years.
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“That's going to be a great addition to the lineup,” said Lieb. He said that other new models will include a smaller variation of the four-door coupe and an SUV at a lower price point.
“We're the market leader in the top end of the luxury market. We're the leader in the middle and the end of the E-Class, so whatever more growth there is going to cost us a lot of money” he said. “So, the segment we are becoming stronger and stronger [in and] where we hope to grow down the road even more is really the C-Class.”