Jay-Z Has Unique Maybach Fix as Daimler Can’t Abide Slump: Cars
Posted by adminSept. 9 (Bloomberg) — Jay-Z and Kanye West made it clear in their video for the song Otis that Daimler AG’s ultra-luxury Maybach brand would be better off in a different form.
The two rappers sawed up a Maybach, which starts at $372,500, transforming it into a post-modern topless buggy, with its hood and trunk lids switched, the doors removed and flames spewing from the rear. While their brazen re-styling may not be the answer, sagging sales mean Daimler is considering changes.
Maybach, a hallmark of German motoring opulence in the 1930s, has failed to mount a serious challenge to Bayerische Motoren Werke AG’s Rolls-Royce and Volkswagen AG’s Bentley since being reintroduced in 2002. Sales, which were targeted at more than 1,000 a year, topped out at 600 cars in 2003 and sagged to 200 last year. Rolls-Royce sold 2,700 autos in 2010, while Bentley delivered 5,100.
“We’ll make a decision on the future of the brand in due course,” Joachim Schmidt, head of sales and marketing at the Stuttgart, Germany-based automaker’s car unit, said in an interview. “We’re not under any pressure.”
The marque’s dwindling sales adds to the challenges facing Daimler Chief Executive Officer Dieter Zetsche after Mercedes- Benz was passed this year as the world’s second-largest luxury- car brand by VW’s Audi. The automaker is also making a second go at transforming the Smart city car into a nameplate with multiple vehicles to target younger urban drivers and meet environmental rules to reduce fuel burn.
Over the past five years, Daimler shares have fallen 8.6 percent while BMW stock rose 39 percent and VW’s preferred shares more than doubled.
Not Enough Madonnas
While Maybach has won over stars like Jay-Z and singer Madonna, it hasn’t gained a broad following among the world’s wealthy because it lacks the distinctiveness and tradition of its competitors. The last of the 1,800 original Maybachs was manufactured in 1941 — six decades before the re-launch.
“The Maybach product was always a non-starter — too big, too ostentatious, too expensive,” said Simon Empson, managing director of U.K. auto website Broadspeed.com, who helped sell a Maybach to a London customer in 2006. “I can’t see any future for this marque.”
The options for the brand range from spending an estimated 500 million euros ($700 million) on a revamp, partnering with another high-end carmaker like Aston Martin, integrating it into Mercedes or shutting it down, said Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen.
“Daimler can’t continue Maybach as it is now,” said Dudenhoeffer. “It leans too heavily on the S-Class and doesn’t do enough to boost Mercedes. If they’re going to continue one brand aside from Mercedes, then the choice is clearly Smart.”
Dwindling Dealers
Growth may be hard to come by. Maybach’s dealer network in the U.S., where it sold about 30 percent of its cars last year, has dwindled to 30 from 85 in 2002.
Still, Daimler continues to invest in the brand, even as it holds talks with Aston Martin on a potential cooperation, according to two people familiar with the situation.
Last year, it updated the two sedan models with new chrome grills and cleaner 12-cylinder engines. The rear passengers in the $423,500 Maybach 62 got an optional 19-inch cinema screen. At the Cannes Film Festival in May, it presented a special edition of the 20-foot 62 sedan that was studded with diamonds from Swiss jewelry maker De Grisogono.
At the International Motor Show in Frankfurt, which starts next week, Maybach will display a 62 model at its stand. The carmaker also offers the made-to-order Landaulet open-top version, which starts at $1.38 million.
‘Best or Nothing’
The chief argument for keeping the brand, which traces its history to Wilhelm Maybach, an engineer who helped Gottlieb Daimler develop motors for the first automobiles, is to compete with BMW and VW for the world’s wealthiest customers.
“For us as a luxury-car manufacturer, it’s good to be represented at the highest end of the market,” said Daimler’s Schmidt. “We make good money on every Maybach we sell,” and the waiting list for delivery is at least six months, he said.
The average Maybach takes about 60 days to build compared with three to four days for a typical Mercedes. Customers can choose from more than 2 million combinations of color, leather and accessories, such as an interior perfume atomizer and handbraided seat piping. All Maybachs come standard with a refrigerator in the rear and two silver champagne flutes. For some, the hand-crafted luxury has a positive spillover effect.
Appeal for Guidance
“Maybach has a resonance that also helps Mercedes-Benz,” said Peter Ritter, head of Torpedo-Garage, a Mercedes dealer in Kaiserslautern, Germany. “It’s important to offer something to compete with Rolls-Royce and Bentley.”
Still, there are other options for Daimler to compete in the ultra-luxury segment. Expanding the AMG high-performance unit, which developed the SLS gull-wing supercar, may be a better alternative, the University of Duisburg-Essen’s Dudenhoeffer said.
In any case, Kanye West doesn’t seem to have the answer and pleads in the song for guidance.
“Maybach bumper sticker reads: ‘What would Hova do?,’” West asks in the Otis lyrics, referring to a nickname for Jay-Z.
–Editors: Chad Thomas, Heather Harris
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