Profits take priority over sales for Zetsche at Mercedes

Quality and profitability are the key words for Dieter Zetsche as
he prepares to take the reins of the beleaguered Mercedes-Benz Group. Zetsche is playing down the importance of sales
volume, which could be counter to their targeted quality improvements. Mercedes-Benz is in a crunch. They are not
selling in the volume that they desire, and their products are plagued with quality problems. Obviously their solution
seems to be to reduce volume and focus on providing quality product. Hopefully, lowering production and sales volumes
while improving the product will allow them to sell at a higher price while reducing the warranty costs associated with
quality defects. This is a tough game for MB. Lexus has effectively put more luxury into their products, while BMW
continues to be king of the performance hill. MB could play the field between the two, but Audi is right there and is
more and more competitive with each new model. Building some brand image and backing out of the volume race might be
the trick, but it’s going to take some time to get there.

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