Milestone 1

"The Best or Nothing" Mercedes-Benz

Known as one of the most famous, luxury car brands in the world, manufactured in 17 countries and 5 continents, with its headquarter in Germany. Mercedes-Benz was founded in 1926 by Karl Benz, Gottlieb Daimler, Wilhelm Maybach and Emil Jellinek, whose daughter Mercedes is our original namesake. (Mercedes)

BMW, Porsche, Audi, Lexus, Ferrari and Lamborghini, all of them are well-known luxury cars, but Mercedes has a comparative advantage. The company is constantly working on new, sustainable methods of producing its parts.

In the interior, for example, Mercedes-Benz offers various high-quality upholstery fabrics made from up to 100 percent recycled PET bottles, in addition to leather replicas and microfibre. The floor coverings in the EQS use a nylon yarn that comes from recycled carpets and recycled fishing nets. In addition, Mercedes-Benz also relies on the use of natural fibers and textiles to replace conventional plastics with renewable raw materials. (Mercedes) Furthermore, they recycle aluminum, the advantage: when using secondary aluminum from aluminum scrap, around 90 percent of the energy required can be saved compared with the production of primary aluminum, while resources can be conserved. (Mercedes) And those are only a few examples, Mercedes- Benz is working hard on solutions to make their production more environmentally friendly. So yes, Mercedes-Benz does have a comparative advantage because they are constantly trying to improve while selling luxury cars with better features than other companies do for the same price.

Since the economic systems in many countries are affected by the Covid pandemic and the Ukraine war, there is a shortage of certain models. The V8 model for the 2022 model year is not being sold in the US right now because of a “supply chain” issue and other issues. (Forbes) The demand is high but the company is short on semiconductors, which are chips used in the car. However, other models are still being sold and manufactured. Also, other automotive companies have the same issue with the chips as Mercedes. Therefore, Mercedes is still a top seller, even this year. The demand is a little bit higher than the supply, but this makes it more exclusive.

As mentioned earlier Germany is Mercedes-Benz's home country, with a GDP of $4.5 trillion. (Heritage) The German “social market” economy is the fourth largest in the world. The German economy did better than other European countries during the Corona pandemic. However, Germany is facing many problems that are hurting the economy.

“Demographic changes and resulting labor shortages, supply chain bottlenecks, burdensome debt, especially on the municipal level, high inflation, and higher energy prices due to the war in Ukraine are factors that could dampen near-term competitiveness.” (International Trade Administration) Although the world faced many challenges during the last few years, Mercedes-Benz seems to do pretty well. Fluctuation in GDP, the Corona Pandemic, inflation and patents did not hurt Mercedes. Well, it might did hurt the company but they figured out a way to still succeed. As the Chairman of Management states: “2021 was a year of strategic progress for Mercedes-Benz. Three numbers illustrate how this transformation is gaining traction: Top-end vehicle sales rose by 30%, sales of electric cars surged 64%, and our adjusted EBIT increased by 105%.”

As we can see it is not always easy to keep going, sell a product in a competitive market, assure customers' happiness and adjust to new technologies. The most important thing is to keep improving and finding new ways and methods to make it work. As Mercedes-Benz’s slogan states: "The best or nothing.”

References:

Eisenstein, Paul A. “Supply Problems Will Keep Most Mercedes V8s Out Of U.S. in 2022.” forbes.com. 04 October 2021. https://www.forbes.com/wheels/news/mercedes-not-shipping-v8s-for-2022/#:~:text=Consumers%20won't%20be%20able,the%20company%20told%20Forbes%20Wheels. Accessed 04 September, 2022.

Heritage Foundation. “2022 Index of Economic Freedom- Germany.” heritage.org. https://www.heritage.org/index/country/germany. Accessed 04 September 2022.

International Trade Administration. “Market Overview (Germany).” trade.gov. 04 August 2022. https://www.trade.gov/knowledge-product/germany-market-overview. Accessed 04 September 2022.

Mercedes-Benz. “Full Year Report And Results 2021.” group.mercede-benz. 11 March 2022. https://group.mercedes-benz.com/investors/reports-news/annual-reports/2021/. Accessed 04 September 2022.

Mercedes-Benz. “Quick Facts.” mbusa.com. https://www.mbusa.com/en/about-us. Accessed 04 September 2022.

Mercedes-Benz. “Innovative Materials for Sustainable Luxury.” group.mercedes-benz. https://group.mercedes-benz.com/sustainability/resources/sustainable-materials.html. Accessed 04 September 2022.