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We don't think of Mercedes Benz as a global car company but it is fast becoming one. The V-class MPV (available here from October)) and the Vito van come from Spain. The M-class 4x4 'sport utility' starts production in 1997 in Tuscaloosa, USA, for all wor
27 May 1996
three corners of the world
We don't think of Mercedes Benz as a global car company but it is fast becoming one.
The V-class MPV (available here from October)) and the Vito van come from Spain. The M-class 4x4 'sport utility' starts production in 1997 in Tuscaloosa, USA, for all world markets.The small A-class Mercedes (also to be launched next year) will be made in Brazil as well as Germany. The Smart city car venture with Swatch starts production in France but there are plans also to build it in the US and Japan.
No wonder the company is pressing home 'Made by Mercedes' rather than 'Made In Germany'. In some parts of the world this distinction was drawn some time ago, as I discovered on a recent tour of some of Mercedes' facilities in the Far East.
The marque of the three pointed star takes pride in being represented in all markets, even where sales are very low, which explains why official government cars in every developing country seem to be Mercedes.
Its managers take pleasure in pointing out that rival BMW is only present in the higher volume markets.
In many places, access is, or has been, effectively denied unless the cars are assembled locally. Thailand, one of the fast expanding markets of the Far East, used to have an import ban and still taxes built-up cars exorbitantly.
I went to a factory in the outskirts of Bangkok, where C, E and S-class saloons are assembled from CKD (Completely Knocked Down) kits. The Thai owned Thonburi Assembly Plant has been putting Mercs together since 1977. This year they will produce about 4,000, with 54 per cent Thai content. German quality inspectors are on hand and are keen to explain that all safety related items, including key parts of the bodyshells, are supplied from Germany.
These cars sell alongside CBU (Completely Built Up) cars from Germany at more-or-less the same high price - œ50,000 for a C180, œ110,000 for a S320 - though the locally built models have a higher level of equipment, including Thai produced leather seats and trim.
Given the choice, I imagined that most buyers would opt for a German original but apparently not; some companies have a policy of buying products made in Thailand.
Similar situations exist in Indonesia, Malaysia, Vietnam, and other countries of the Asean trade area, but their co- operation does not, as yet, extend to exporting cars from one country to another. And it does not make economic sense to export these Asian assembled cars back to Europe.
Singapore, the wealthiest country in the region, does not have its own car industry so its 275 per cent import tax applies to all cars sold. Incredibly, Mercedes has 15 per cent of the total car market and has at various times had the best selling car in Singapore. The cheapest C-class sells for the price of an S500 in Germany. That is without the Certificte of Entitlement, a government device that restricts the number of new cars on Singapore's roads, which has to be bid for - average price œ20,000.
With prices like this, and still a long wait for delivery, it is not surprising that 'grey' imports are a problem and since these countries drive on the left, the source is usually Britian.
There are reckoned to be 2,000 unofficial Mercedes imports to Thailand in a year, despite strenuous efforts to stop them. A Mercedes dealer who supplies a car in the UK that turns up in the Far East is penalised 3 per cent of its price by the factory.
Singapore is the hub of the expanding Asian markets and Mercedes Benz Asia has been set up there to co-ordinate its operations and as a centre for parts distribution. A look around its new warehouse illustrates the extent of Mercedes' internationalisation: components from Indonesia, Brazil, India, Korea, Spain and, of course, Germany.
This interchange is in full swing with commercial vehicles. Mercedes has a special light truck, the MB700, developed for Asian countries and made in Indonesia and an MB100 van that is sourced from Ssangyong in Korea.
The old E-class saloon will soon find a new life in India, where it is to be manufactured in association with the Telco industrial group. There is no intention to export these cars outside the region but sensibly India will become the sole source of replacement parts for the old model.
But Far Eastern Mercedes may eventually come our way from Korea. The relationship of Mercedes Benz with Ssangyong is rather different from its deals in other parts of Asia. Mercedes has a 5 per cent shareholding in the Ssangyong Motor Company, which at present makes only 4x4s and commercial vehicles. It has provided the technology for a state-of-the-art engine manufacturing plant at Changwon, on the east coast of South Korea.
Ssangyong makes eight different types of Mercedes engine at Changwon, petrol from 1.8 to 3.2-litre and 2.2 and 2.9-litre diesels. The diesel engines have 80 per cent local content. And, putting another twist on international relationships, the cylinder block castings are supplied by Mercedes Benz South Africa.
At present the main applications for these engines are the Ssangyong Musso 4x4 and the Istana, the van which is also sold as a Mercedes in other parts of Asia. In 1998 the plant's capacity will be increased to 250,000 engines a year, as by then Ssangyong will be in the passenger car business - with a Mercedes.
Details of the Ssangyong 'W' car are still secret but it is known to based on the old E-class but with a bigger body that puts it between the E and S-class. Manufactured, rather than just assembled there, it will claim to be Korea's most prestigious car.
Mercedes Benz has 27 engineers resident in Korea to help set up production and has been directly involved in the W's styling, though the car will be badged and sold as a Ssangyong. It will appear in Korea next year and will eventually be exported, though the IM Group which sells the Ssangyong Musso in the UK, does not yet know if and when it will be available to them.
Might it also be sold by Mercedes, like Ssangyong's van?
Mercedes Benz chairman Helmut Werner said: "Only Mercedes Benz can make a Mercedes car", implying that it would need to increase its 5 per cent in Ssangyong to a controlling interest before a Korean made car can carry the three pointed star. I believe that such a deal - making Ssangyong Mercedes' Asian manufacturing base - was the original idea but it now seems less likely. Foreign ownership of Korean companies is complicated. And Mercedes is currently rather busy developing businesses in other parts of the world.
STAR PERFORMER: Made by Mercedes the maker will be the power behind Ssangyong's new model launch (left)Ray Hutton finds that Mercedes is thinking global when it comes to productionPOWERFUL RELATIONSHIP: Mercedes has provided the state of the art technology behind Ssangyong's engine plant in Changwon, South Korea
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