Mercedes Tries To Resolve A Paradox

Mercedes-Benz buries its commercial vehicle results in the figures for its much bigger cars division. It is widely believed that the trucks business is chronically unprofitable.

Jurgen Schrempp, chairman of Daimler-Benz, the parent company, admits: With a few exceptions, we have never made a lot of money in trucks.

Schrempp has promised greater transparency. From this year, results for commercial vehicles will be shown separately. However, Helmut Werner, Mercedes-Benzs chairman, says it has not been decided how the figures will be presented.

Analysts should not hold their breath. The main cause of Mercedes-Benzs poor earnings is that it still builds most of its vehicles in high-cost Germany. Unlike Mercedes-Benz passenger car division and other German carmakers, the domestic commercial vehicle side has been slow to crack the whip.

 

Werner admits the pace of reform has sometimes been dictated by introductions of new models, to which labour reforms have often been tied. The link between new models and low costs is twofold. New vehicles are designed to be built more cheaply than predecessors, and the company has used the tacit threat of moving production abroad to secure union concessions.

Last years introduction of the Sprinter, Europes van of the year according to leading specialist publications, prompted more flexible working practices at the Dusseldorf factory where it is made.

Werner says greater labour flexibility and lower production costs of new models brought a big turnround in van profitabilty in the past 18 months.

Although critics attribute the improvement more to the launch of the Vito