You have all heard the lyrics of Janis Joplin’s 1970s song, “Oh lord won’t you buy me a Mercedes Benz”. If Janis Joplin were to write this song in this era, she would most likely be asking for a BMW or Audi instead.

The Mercedes Benz, part of Daimler’s car division, is trailing behind both BMW and Audi in sales (Figure 1). One of the main reason’s for Mercedes slow growth is that in the 1990s the company attempted to transform itself into a transport conglomerate, adding planes, trains and even spaceships into its product mix, causing the business to deter itself from its core business activities of making classy cars.

Secondly, Daimler arrived late in the Chinese automobile market, one of the largest in the world. This deprived the company from having a first mover advantage. BMW and Audi who have arrived in the Chinese market early, outsells Mercedez by 70% and sells twice as many cars respectively.

Finally, Daimler’s technology lags behind its rivals. BMW has launched its string of new electric cars and Audi can draw from the vast resources of its parent, Volkswagen. Companies who fail to innovate will mostly loose key customers. Kodak and Blackberry’s demise is a prominent example of this. Although operating in different industries, they are key examples of companies that failed because of failure to innovate technologically and adapt to consumer behavior.

Thus, in order to move out from being “third best”, Daimler must step up its game.

Figure 1: Worldwide Car Sales 2005-2012

Works Cited