Rumor: Daimler, BMW May Buddy-Up To Retain Market Share

September 16, 2009

Despite all the great news coming out of Germany in recent days, it's apparently not all biergartens and schnitzel over there: a new article in Der Spiegel reports that high-end German automakers Mercedes-Benz and BMW are facing tough times on the sales floor, as the world's touch-and-go economy forces customers to purchase cars from their lower-priced competitors.

Mercedes-Benz's parent company, Daimler AG, has seen auto sales drop by 18% compared to last year, and their truck sales are at about 50% of what they had been. First-quarter losses for 2009 total around $3.5 billion, and rumors abound that Daimler's legendary CEO, Dieter Zetsche, may be replaced in the not-too-distant future. So far the company has limped along, supported by government subsidies for its sprawling workforce, but it's clear that things are going to hit the fan very soon.

There is also talk -- and this is where it gets interesting -- of a strategic alliance between Daimler and BMW. (A similar deal was considered between Daimler and Volkswagen, but the partnership was never consummated.) Sharing labor and other resources would seem to make sense for the two companies and save millions of euros each year. To date, however, petty squabbles between the companies' engineering divisions and the Quandt family's fear of a possible Daimler takeover of BMW has hindered such discussions.

Given the tendency of automakers to gobble up their weaker competitors (especially in Germany), it's probably in both companies' best interest to consider an amicable partnership. Otherwise, Audi's efforts to leverage technology from its siblings in the Volkswagen family and outsell BMW and Mercedes-Benz by 2015 might bear serious fruit.

[DerSpiegel]

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