La Lettre du GERPISA no 118 (decembre 1997)

Débat - Peter Jansen

A case of ist own ?

The debacle of the A-Class

Since the departure of Edzard Reuter from the company head of the holding Daimler Benz its car division Mercedes undergoes a strategic change. As we are beyond the time where small was considered to be beautifull, the Mercedes Management is convinced that a car maker has to produce at least one million cars per year, if he wants to stay in market. Faced with the success of BMW which has enlargend ist range of products by overtaking Rover Mercedes took the decision to leave the niche of luxuory cars.

The shift comes out quite clearly in the sales forecast for 1998. Within the enlargened range of models the A-Class and the SMART are supposed to be sold as often as the E-Class.

Sales forecast 1998
Source : Der Spiegel No. 45/1997 based on Capital

The adventure of entering in the range of small and compact cars started in the beginning of the 90s. After the departure of Peter (chief of developement) in 1992, who had blocked in former times the development of the Nafa (NahverkehrsFahrzug = car for local traffic) the ÑPerestroika of car conceptionì began. Under the responsability of Dieter Zetsche the A-Class developement started in 1993. A project team, called the Ñyoung wildsì, mainly composed by young engineers coming directly from the university started to Ñreinvent the carì (Der Spiegel).

For the first time in its history Mercedes took the decision to produce a front wheel driven car, supposed to compete directly with the ÑGolf-Classì. The ambition was rahther high : to conceive a car, short like the Fiesta with the roominess of the Mondeo. This led to the revolutionary sandwich-concept. In order to meet safety rules (passive security) the engine is slung between the front wheels and designed to slip under the passengers feet in a crash, while the raised floor protects against a side impact. The drawback of this conception - the rather high center of gravity -apparently has been ignored.

After having spent DM 2,5 billion on the developpement of the A-Class the move towards the mass market turns out to be risky. Since a reporter of a Swedish motor journal rolled over the A-Class while performing an abrupt swerwe Merceds is Ñcaught in a moose trapì. Across Europe, motoring journalistes have been trying to tip over a Mercedes and they succeeded while the old fashioned Trabant passed he test. One of the greatest mysteries is how Mercedes could fail to spot the problem. The A-Class was test driven for five million kilometres with extensive special tests of ist roadholding. For this very reason the first reactions of the Mercedes-Management were trying to pipe down the problem. It was reasoned that any small car would flip under such circumstances. But as the public reaction proved to be rather important in Germany (customers began to cancel their orders) the company recognized that there are problems in extreme situations. It promised to fit different tyres blaming the problem on those, originally supplied by Goodyear (conform to the specifications of Mercedes !). Furthermore they promised the recall of already delivered cars and to fit for free an optional bit of drive control electronics (EPS = Electronic Stability Programme, produced by Bosch). This device costing DM 1.700 intended as an optional extra shall be from march 1998 the standard equipement. Inspite of this promise critics did not stop and finally J¸rgen Schrempp decided to stop the delivery of the car for 12 weeks. During this delay the Ñoptimal solutionì which has been found by the company engineers shall be applied.

Reading the press one can state that a series of doubts subsist. Firstly ESP will be ready for mass production only in february 1998. Secondly this anti skid braking and traction control system ist not yet accomodated to small cars. It still has to be tested. Thirdly it is not sure whether ESP can be introduced retrospectively. The prduction in Rastatt is continuing (300 A-Class cars per day). According to The European around 40.000 cars will be built before ESP can be fitted as an original equipment. Last but not least there is no consense that it would solve the problem. ESP will subvert the moose test, which is ment to be completed without braking. But in order to avoid a skip, ESP operates the brakes automatically.

The equipment with other tyres and ESP does not seem to be sufficient. According to a specialist of the DEKRA (safety controls for cars) a new chassis is required. Altering the chassis design would set back production and delay sales. ÑIt would cost hundred of millions of marks. The total bill for cleaning up the mess could easiliy reach half a billion marks, always assuming that Mercedes manages to make the A-Class safe.ì (The European 20-26 Nov. 97). Modifications of the chassis would in the normal case require long road tests, but does Mercedes have the time ? If Mercedes cannot fix the A-Class fast, the reputation of the model will be ruined and that of the company will be dented (The Economist, Nov. 15th 1997).

The problem for the company is even worst, because the SMART (joint venture with Swatch, 80% of the shares are hold by Mercedes) is supposed to be launched in the next spring. After the A-Class debacle rumours on the roadholding quality of the SMART already start. It is known, that tests in pre-series were not convincing. So the company has to avoid a different spelling of SMART (Some Motorcars Are Returning and Tipping). The problems for the company do not end here. Even in a very traditional field (development of a new engine) Mercedes engineers failed. An engine, which was supposed to be produced in Stuttgart proved to consume too much. Here again one has to restart the development.

The A-Class, conceived as a challenge for the Golf proces bad jokes. Klaus Kocks, Volkswagen's public affairs director is quoted by die Zeit as saying : ÑBefore Mr. Piech and myself by an A-Class, we will open a brothel in Bad Oldesloe.ì Volkswagen has more than good luck with the public humiliation over the tumbling A-Class of Mercedes. ÑThe A-Class desaster has obscured the Golf's problems. It failed a British side on crash test earlier this year. This resulted in rapid changes in body frames and delayed production.ì (The European 20-26 Nov. 1997). The current daily production is around 1.000 cars, compared to a planned production of 3.000. The German Magazine Wirtschaftswoche (13.11.97) reports other problems of Volkswagen. The new VR5-engine gave in a circuit Ñautonomously full speedì. The complete acceration was due to ignition problems, caused by the misfit of a component, controlling the motor cycles.

Astonishingly it is not the specialised motor press, but the Wirtschaftswoche and the Spiegel, which are raising the crucial question : Is this type of problems due to the increase of modells combined with reduced development times ? Going beyond the debate of technical problems and ist technical solutions we have to raise the question, whether the appearing problems are not a symptom of Ñspeed managementì and an overload of simultaneous changes.

Looking once more at Mercedes the following circumstances might be an explanation for the A-Class debacle :

It might be possible that the organisational capacity of the company is not sufficient to steer at the same time a high number of major projects. In the special case of Mercedes on will probably have to take into account additionbal organizational perturbations, caused by the competition between Werner (the former chief of the Mercedes Division) and Schrempp, who imposed the departure of Werner and a transformation of the holding's structure in the time, when the A-Class has been developed.

Looking more closely to the specific problems of the A-Class the conjunction of different factors might have contributed to the desastre :

Looking at these factors I think, that the problems of the A-Class are not specific problems of the Mercedes Company. Similiar difficulties are already reported for the Volkswagen Company. Therefore one has to look closer to capacity to steer simultaneous innovations within the company. Probably the European car industry is trapped by ist own intention to follow managerial fashions as quick as possible, before looking at the feasability.

Notes de bas de pages

  1. The following contribution is based on the lecture of : Der Spiegel, Die Wirtschaftswoche, Die Zeit, Autobild, The European, The Economist, L'Automobile. All information should be taken with the required precaution.

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