Mercedes and BMW Collaborating to counter VW/AUDI/PORSCHE economies of scale....
02-23-2009, 03:42 PM
#1
Mercedes and BMW Collaborating to counter VW/AUDI/PORSCHE economies of scale....
Irresistible logic of Daimler and BMW collaborating
By Paul Betts
Published: February 16 2009 19:29 | Last updated: February 16 2009 19:29
It is a sign of the times. Until recently, there could not be two fiercer rivals than Germany's luxury carmakers - Stuttgart-based Daimler's Mercedes-Benz division and Munich's BMW. They have been competing since the 1930s. Their rivalry intensified in the postwar era, especially after Daimler tried and failed to take over BMW in 1959.
Yet these best of enemies have, of late, been accelerating moves to collaborate to revive falling profit margins without losing their respective brand identities. They are now working on a plan to order jointly secondary equipment such as switches, seat frames and air-conditioning modules, as well as developing new engine components.
The logic of such collaboration looks pretty irresistible. Indeed, so irresistible that the two arch-rivals had started talking well before the current crisis in the car sector. They are already working together on new hybrid engine technologies. But with the car industry slumping, Daimler and BMW have decided the moment has come to step up their collaboration.
Even before the latest crisis, the two German mid-sized luxury brands recognised that they faced a problem of scale. After all, they could not rely on a mass-market parent to help contain development costs, nor provide them with greater leverage to negotiate lower product prices from suppliers. The classic example of this is the way Volkswagen's luxury brand, Audi, has benefited from its VW ties in a broad collaborative system that also includes Porsche, VW's new owner. VW alone produces more cars than Daimler and BMW combined.
By Paul Betts
Published: February 16 2009 19:29 | Last updated: February 16 2009 19:29
It is a sign of the times. Until recently, there could not be two fiercer rivals than Germany's luxury carmakers - Stuttgart-based Daimler's Mercedes-Benz division and Munich's BMW. They have been competing since the 1930s. Their rivalry intensified in the postwar era, especially after Daimler tried and failed to take over BMW in 1959.
Yet these best of enemies have, of late, been accelerating moves to collaborate to revive falling profit margins without losing their respective brand identities. They are now working on a plan to order jointly secondary equipment such as switches, seat frames and air-conditioning modules, as well as developing new engine components.
The logic of such collaboration looks pretty irresistible. Indeed, so irresistible that the two arch-rivals had started talking well before the current crisis in the car sector. They are already working together on new hybrid engine technologies. But with the car industry slumping, Daimler and BMW have decided the moment has come to step up their collaboration.
Even before the latest crisis, the two German mid-sized luxury brands recognised that they faced a problem of scale. After all, they could not rely on a mass-market parent to help contain development costs, nor provide them with greater leverage to negotiate lower product prices from suppliers. The classic example of this is the way Volkswagen's luxury brand, Audi, has benefited from its VW ties in a broad collaborative system that also includes Porsche, VW's new owner. VW alone produces more cars than Daimler and BMW combined.
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