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Who would have thought? This is no April Fools joke

http://www.bloomberg.com/apps/news?pid=10000100&sid=aoes_3AkGcP4&refer=germany

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DaimlerChrysler Recalls 1.3 Million Mercedes-Benzes (Update2) March 31 (Bloomberg) -- DaimlerChrysler AG, the world's biggest maker of luxury cars, is recalling 1.3 million Mercedes- Benz brand models worldwide to fix electrical and braking-system faults, marking another blow to the brand's quality reputation.

Mercedes-Benz E-Class and CLS-Class cars built between January 2002 and January 2005 will have battery-control software replaced to enhance the on-board power supply, and E-Class, SL- Class and CLS models built from June 2001 until this month will receive updated braking systems, Stuttgart, Germany-based DaimlerChrysler said in an e-mailed statement today.

Mercedes has plunged in customer satisfaction surveys in Germany and the U.S., partly because of technical flaws. DaimlerChrysler, the world's fifth-biggest carmaker, has lost sales to Bayerische Motoren Werke AG and Toyota, and profit in the fourth quarter fell 63 percent to 526 million euros ($684 million) as earnings at the Mercedes Car Group luxury unit collapsed.

``Can it get any worse for Mercedes?'' said Stephan Thomas, a fund manager at Frankfurt Trust in Frankfurt, which oversees $16 billion including DaimlerChrysler shares. ``We already knew there was a quality issue but I'm surprised that this recall includes cars all the way up to March 2005.''

Shares of DaimlerChrysler were up 19 cents, or 0.6 percent, at 34.66 euros as of 5:11 p.m. in Frankfurt after rising as much as 1.3 percent.

Regulator Checks

``They're trying to clear the table with this and start with a blank slate,'' said Arndt Ellinghorst, an analyst at Dresdner Kleinwort Wasserstein in Frankfurt who has a ``reduce'' rating on the shares. DaimlerChrysler may use some of the 600 million euros set aside in risk provisions in the fourth quarter to pay for the recall, and may take an additional charge of 100 million euros to 150 million euros in the quarter ending today, he said.

DaimlerChrysler will also check and, if necessary, replace alternators' voltage regulators on Mercedes-Benz models equipped with six- and eight-cylinder engines built between June 2001 and November 2004, the carmaker said today.

``We are now producing the best product quality ever and our aim is to ensure that those vehicles in the hands of customers which are the cause of complaints achieve a standard of quality that reflects our highest expectations,'' the company said.

Eckhard Cordes, who took over in October as chief executive officer of Mercedes Car Group, in January said the division had fixed its quality problems and that the cars rolling off the assembly line then were ``top quality.''

Some older models didn't meet the company's standards and would be repaired when brought in for regular service, Cordes said at the time. Quality of the cars exiting factories now is ``the best ever,'' he reiterated on March 8.

`One Big Hit'

``It's typical Daimler to take one big hit and then pick things up in the following quarters,'' Ellinghorst said. ``Cordes wants to put all the quality talk behind them.''

Robert Bosch GmbH, the world's largest maker of car parts by revenue, said in a separate e-mail that it will ``support'' the Mercedes-Benz recall. The battery controls and voltage regulators were built only for the models in question and the recall won't affect other carmakers, the Stuttgart-based supplier said today.

Bosch this year was also responsible for production problems at DaimlerChrysler and BMW because of faults in pumps for diesel engines while General Motors Corp., the world's biggest carmaker, last month recalled 155,465 pickup trucks and sport-utility vehicles because a part in a Bosch-supplied brake assembly could fail, making it harder to steer and stop.

Mercedes ranked 29th out of 37 brands in a June reliability study of three-year-old cars by J.D. Power & Associates. At home, Mercedes-Benz had the most electronic failures of all brands sold in Germany, Michelstadt, Germany-based automotive consulting firm 3hm Automotive said in July. It was also last among 33 brands in a March 2004 study gauging customer satisfaction by the ADAC German Automobile Club. Car owners were most satisfied with Toyota.


To contact the reporter of this story:
Alan Katz in Paris at [email protected].

To contact the editor responsible for this story:
Dan Stets at [email protected]
Last Updated: March 31, 2005 10:31 EST
 

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Aah, so thats what that is!
A family friend bought, I think it was, an 03 E320, and they have been having a ton of problems with the brakes. They are planning to get rid of it and go back to Acura...
 

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Not surprising. Mercedes-Benz, and many European makers in general, have been having serious quality issues over the past few years. Their quality ratings have tanked. As it stands now, several of the Japanese makers (but not all) have some of the best quality, several North American makes have quality almost comparable with the best Japanese maker, and then the rest of the Japanese and Korean makers and the pack of North American and European makers. The lower end is inhabited by Mercedes-Benz and the rest of the lower end of the spectrum is heavy with other European makers, a few North American makers and the odd Korean maker.
 
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