The forever outfit, and a car for “right now”

Picture of Adam Bahret
Adam Bahret

I didn’t create this image but I thought it was an interesting idea. A consumer has captured  a niche group of manufactures that are basing their brand on “service for life.”  The forever outfit.

I saw this the same day that Tesla came out with their semi truck announcement.  A few things that caught my attention from that announcement was how they emphasized reliability and low maintenance in their product profile.  “The brake pads will last forever” and “The drivetrain has a 1 million mile warranty.”

The interesting part of this is that I doubt having jeans that are warranty’d forever will be something that will drive market dominance. Creating a truck with parts that last forever, or are guaranteed for an extremely long time, that is a sure way to have market dominance. I believe the difference is “consumer product” vs “industrial product.”  I wouldn’t list “long term durability” as key factor across all consumer purchases.  There is a big difference between a consumers vehicle and a vehicle used for industrial profit.  I think Mercedes made a very conscious switch based on this realization a few years ago.

For the 90 year period of 1901 to 1991 Mercedes could list durability and reliability as one of the reason’s they were considered the pinnacle of consumer automobiles. There original slogan was “The best or nothing.”  After the 80’s ( I have specific model’s that mark this time period as the change) I would say they began a journey to becoming one of the manufacturers with the least reliable cars on the market.  A $90k Mercedes purchased today will have a resale value of $20K when it is 5 years old.  That’s a depreciation rate of 15%/year.  Why?  The reason is simple, they are a reliability nightmare.  That $20K is just the ticket to entry into the fair.  If you purchase a 5 year old Mercedes expect to be pumped for the equivalent amount of your purchase price over the next few years. “How did the popcorn, rides, and one hotdog end up costing more than the tickets to get in here?”  It’s not that the transmission or motor is going to blow up.  It’s going to be the XBY7 sensor or the fact that you didn’t start it for a week and the secondary electronics battery in the trunk got low and now the computer can’t remember if it’s in a car or still on a parts shelf.

But they sell plenty of Mercedes every year.  Why do customers keep coming back year after year if they are not as reliable as they once were?  I think Mercedes made this change consciously.  They decided that their niche market wasn’t owners that wanted to keep their car for 20 years.  My mother in-law kept her 1980 Mercedes Diesel station wagon for 24 years before trading it in.  It was still in tip top condition.  Is that who Mercedes wants for a customer?

What about the portion of Mercedes customers that buy Mercedes because they have the newest tech?  Mercedes is vulnerable to loosing those customers everyday if Lexus, Audi, or…Tesla can give them something new and exciting that others on the road don’t have.  These are customers that buy a new car every three years.   So Mercedes began to push harder to be the brand that was including groundbreaking technology.  But what had to be compromised to do this?  I would say clearly it was not being able to mature technology before putting it into their cars.

Time to Market, new technology, and reliability… one of those three has to give under pressure.   In this business model the lack of reliability maturity is the problem of the second owner.  The original owner has already gone back to the dealership to pick up this year’s model. Who cares if the windshield rain sensor  get’s corroded and puts an unexpected cycling drain on the processor resulting in the brakes being managed by a buffering processor.

It’s not planned obsolescence.  It balancing a product development program with a heavier weighting on features than reliability.  A very concise decision that seems to have worked in this case.

-Adam

 

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