Porsche May Sell Mercedes In Us

The agreement, under discussion for some time, could significantly strengthen co-operation between the two Stuttgart-based companies. Links were first developed in 1990 when Porsche built the E500, a high-performance version of a Mercedes-Benz car. The two companies could not say when the negotiations would conclude. Although the existence of talks has been known for some time, Mercedes-Benz had until recently been thought to be lukewarm for fear of cannibalising sales of its own model.

With construction at Mercedes-Benz's new Tuscaloosa plant in Alabama now complete and production equipment for the new M Class vehicle being installed, a result is expected relatively soon.

 

The new vehicle, developed to compete with products such as Land Rover's Discovery and the Chrysler Cherokee, is designed for the buoyant US sports-utility market. Demand for such vehicles, which have substantial off-road capacity but are usually used by image-conscious drivers on normal highways, has accelerated in recent years as products have been introduced, increasing customer awareness.

Capacity at Tuscaloosa is expected to reach 65,000 units a year, with the bulk destined for the US. Exports to Europe will start in early 1998. The advantages for Porsche of gaining access to the M Class are clear.

Although the company has survived a troubled period in the early 1990s, its range remains limited. Developing a Porsche-badged sports-utility vehicle could create a substantial market.

The appeal for Mercedes-Benz is less obvious - explaining its previously uncertain approach to the talks.

Selling 5,000-10,0 M Class vehicles a year to Porsche would improve capacity utilisation at Tuscaloosa and potentially increase the market awareness for the new vehicle.

However, Mercedes-Benz is believed to have stressed the two versions would have to be substantially different to avoid diluting sales, while the commercial arrangements between the two companies would have to be considered carefully so as not to antagonise Mercedes-Benz's US dealers.