Another new look at the next S-class

Look what was in the Wall Street Journal Today, an excerpt:

"Indeed, trouble was brewing in both divisions. Toyota's luxury Lexus division passed Mercedes as the best-selling U.S. luxury brand in 2000. In response, Mercedes decided to pack more features and technology into its cars without raising prices, leading it to skimp on quality. In quality studies conducted by auto-ratings agency J.D. Power and others, Mercedes used to consistently rank No. 1. In 2002, its scores began to fall. In at least one case, it fell below the industry average.

Ken Pollock saw that firsthand. In 2000, the 57-year-old insurance agent from Coral Gables, Fla., bought his first Mercedes, a $49,000 E340 sedan. Within a few months, his wife noticed a bulge in the dashboard caused by an airbag. To fix it, the dealer replaced the entire instrument panel.

Several months later a rear window slipped down inside the door. After it was fixed, the other rear window broke, followed by a passenger window and, for a second time, one of the rear windows. The headlights turned yellow and the color wore off the leather seats. The cost of the repairs came out of Mercedes's profits since they were covered by a warranty.

"Individually, they aren't big, but put them together and you say, 'This is a piece of junk,' " Mr. Pollock says. "Next time, I'll look at Lexus."

Mercedes tried to keep the problems quiet. In the U.S., it replaced some bug-ridden vehicles for customers who signed agreements promising to keep quiet about the settlement. A Mercedes spokeswoman says such agreements are "standard industry practice." Because "each case is different," Mercedes doesn't want one settlement to be interpreted as an offer available to all customers, she says.

His priority remains fixing the quality problems tarnishing the luxury brand's image. In an interview, Mr. Cordes says Mercedes is devoting management attention and resources "to make sure those cars launched this year and in 2006 and beyond will not be suffering from initial quality issues."

One particular effort, known as the "Zero Defect Initiative," involves, among other things, removing hundreds of electronic gadgets that delighted the company's engineers but annoyed customers. One gizmo on the way out: keys programmed to adjust the seats and mirrors for a particular driver, which work fine until a husband grabs his wife's keys.

A key test of whether Mercedes has conquered its quality problems will come in April, when the new version of its M-Class sport-utility vehicle hits the market. The previous version was a frequent source of complaints from customers unhappy with the quality of its interior and other problems. Mercedes retooled the Alabama plant that produces the M-Class and made design changes to increase its appeal to American customers. The company is also spending additional time and money -- how much, it won't say -- to catch problems by increasing testing of new vehicles and checking electronics more extensively."


http://online.wsj.com/article/0,,SB110791020836949513,00.html?mod=home%5Fpage%5Fone%5Fus