Fancy Cars

Daimler Wants to Retake the Leadership Crown in the U.S.

daimler
Dieter Zetsche, chief executive officer of Daimler, is betting that the company can overtake its domestic rival BMW in the U.S. market.
  • Why it matters

    Why it matters

    With financial and political crises hobbling sales in emerging markets and stagnant sales in Germany and Europe, the automaker is increasingly looking across the Atlantic for significant growth and profitability.

  • Facts

    Facts

    • BMW Group holds a slight sales advantage in the United States, when its Mini Cooper models are included, but Mercedes is growing much more quickly and likely will overtake the Munich-based firm by the end of the year.
    • Daimler has invested €1.82 billion ($2.4 billion) to expand its Alabama plant, which will soon be the company’s third largest production facility.
    • Efforts to unionize by the United Auto Workers (UAW) could become an issue, but Volkswagen Group workers in Tennessee recently rejected unionization and politicians are firmly anti-union.
  • Audio

    Audio

  • Pdf

Visitors are still standing around the room with their finger food and drinks, when suddenly a video flickers across the screen. An assembly line worker starts snapping his fingers and dancing to the song “Happy” by Pharrell Williams.

Soon, all the other workers are dancing in their safety goggles and protective boots. But the production number, staged by public relations strategists in the Daimler Mercedes-Benz plant in west central Alabama, heads to a completely different climax as chief executive officer Dieter Zetsche appears.

Now the entire room is beaming ― from the state governor to the mayor of the small community to the factory workers ― as they celebrate the start of the production of a new C-class vehicle at the state-of-the-art manufacturing plant.

Happy aptly sums up Mr. Zetsche’s mood these days. Last Friday, he arrived to rapturous praise from his hosts in Alabama, where Daimler is spending €1.8 billion ($2.4 billion) on a five-year expansion that will make it the third-largest Mercedes plant in the world.

“Without Mercedes, Alabama would still be a low-tech land,” said Governor Robert Bentley.

It holds true the other way around, too. Without the United States, Mercedes would be in trouble. The country is the largest market for the luxury brand with the three-pointed star. Mercedes and its arch rival, BMW Group, have been going head-to-head for leadership of the luxury car market in the United States for years, with BMW holding a narrow edge when sales of its Mini Cooper vehicles are included.

But Mercedes is growing noticeably faster, thanks to the popularity of its 2014 models, and Mr. Zetsche wants to retake the leadership crown this year without “price incentives or other tricks,” he said during a press conference.

The American market is growing in significance as the nations of the BRIC markets ― Brazil, Russia, India and China ― confront financial or political problems that are chilling car sales. “Hopes in India are sinking and they are falling sharply in Brazil,” Mr. Zetsche said. In Russia, Mercedes has seen a 20 percent increase in sales this year, but with the political situation in flux because of the situation in eastern Ukraine, those numbers could fall dramatically.

Want to keep reading?

Subscribe now or log in to read our coverage of Europe’s leading economy.