German Car Cartel Part 1: Mercedes Benz , the new S-Class facelift, compliance issues, cartel claims and collusion allegation

Readers, viewers and followers of autoarabia have probably noticed over the past few years that our coverage shifted significantly from the light and casual press releases and test-drives to the more sophisticated, in-depth and behind-the-scenes stories. By this shift we are not mainly targeting the masses but rather targeting the stake-holders, the investors, the decision-makers in the different governments and international institutions, the professionals working at the head-quarters of the automotive companies, etc.

The reason is very simple: we do not want to compete with those countless and unprofessional automotive websites in Egypt and the Middle East, the thousands of wonna-be car reviewers and their press-releases-filled blogs and the millions of so-called 'influencers' worldwide. We want to focus on our automotive competence and go back to our roots, which includes explaining to the decision-makers at the automotive headquarters what is really going on behind-the-scenes in the Middle Eastern and North African markets, especially what is going on in the UAE, Saudi Arabia and Egypt, and to offer them some interesting and unveiling articles which they will not find anywhere else in Egypt or the Middle East, and which surely they will never hear about from their importers and dealers in this region.

All renowned and major news websites like Der Spiegel, New York Times, Sueddeutsche Zeitung and many others have been reporting and updating on one earthquake-like news on an hourly basis, after Der Spiegel uncovered this automotive cartel scandal last week.

So not surprisingly that we at autoarabia are also giving lots of attention this week to the current cartel claim and collusion allegations against the major German carmakers Daimler/Mercedes Benz, Porsche, AUDI, Volkswagen and BMW, just like all the major and professional international media and motoring websites are doing.

While AUDI 'got away with it' a few weeks ago and was able to catch the 'positive' attention of thousands of media outlets worldwide for the world-premiere of the all-new AUDI A8 during the AUDI Summit in Barcelona, Mercedes is not that lucky this week. The Mercedes managers were probably expecting positive news and exciting media coverage allover the world about the media launch of the face-lifted S-Class this week in Switzerland. But this did not happen.

Instead of publishing news about the unexpected DTM-departure of Mercedes Benz and about the international launch of the S-Class facelift in Switzerland, thousands of media worldwide are now following and publishing articles about the reputation damage of Daimler and Mercedes Benz due to the current U.S., EU and German investigation on cartel claims and collusion allegation, which were unveiled last week by Der Spiegel.

And although Daimler and Mercedes-Benz might escape a cartel fine because they 'came clean' first and blew the whistle on the other car dealers, when they filled a report against themselves at Germany's competition authority (Bundeskartellamt), this will not hinder them from prosecution in the U.S. and might get them exposed to billion-dollar fines.

And while some media representatives are meeting today (Wednesday) in Zurich for the launch of the facelifted Mercedes S-Class, the supervisory board of Daimler is meeting on the very same day to discuss the allegations about anti-competitive behavior among the other German carmakers and its possible consequences.

This is not the first time that Daimler got caught in an illegal cartel over price collusion. In July 2016 EU regulators imposed a record fine of 2.9 billion Euros against Daimler (Mercedes Benz), MAN (owned by Volkswagen), Volvo Trucks, Iveco and DAF for colluding over 14 years to fix prices and delay adoption of cleaner engine emissions technology. Even BMW announced this week that they will stop any cooperation or projects with Mercedes-Benz after this whistleblowing incident from Mercedes. This cooperation was regarding car sharing projects and charging-infrastructure for electric cars.

But Mercedes-Benz might also be facing hefty fines in Egypt, especially that their reputation in Egyptian has not been very good or shiny since 2015, when the Egyptian government represented in the Ministry of Finance and the Egyptian Customs Authority said that Mercedes Benz Egypt presented to them invoices for their imported Mercedes Benz models with 'inaccurate' prices, which did not sound credible to the Egyptian authorities.

The Egyptian customs authority told Mercedes Benz Egypt that the car-prices published in the Mercedes invoices and import documents were too low, with the aim of paying less customs. Subsequently the Egyptian customs authority investigated the 'real' prices of those models in Germany and other countries with the help of the Egyptian embassies abroad, and imposed 'directive prices' and did not accept the 'official' prices handed out by Mercedes Benz Egypt.

As a consequence Mercedes Benz Egypt was charged by the Egyptian customs authority for an additional 290 Million Egyptian Pounds (approx. 29 million Euros at that time). As expected, Mercedes Benz Egypt denied any wrongdoing and claimed that those were genuine prices, and as usual their marketing and communications reps used the infamous word 'compliance' and that Mercedes Benz Egypt would never do anything against their 'internal compliance' rules. But since last week, 'internal compliance rules' are getting a totally new meaning, not only in Egypt but also in Germany, the EU and the USA.

I think it is about time that Mercedes gets its act together and starts a re-set and re-assessment for its operations in general and for its operations in Egypt in specific. Only in Egypt will you find not-so-professional PR agencies doing the work which the Communication & PR manager or marketing managers are supposed to do, with devastating results for the brand. This needs to be changed.

It is also only in Egypt where you will find that the marketing manager in charge of the Mercedes-Benz advertising budget is at the same time the person who is in charge of communications and who is sitting with journalists to 'discuss' so-called communication & PR issues. This is surely a serious conflict of interest and also does not fit within the so-called 'Mercedes compliance rules' frame.

Only in Egypt will you find that normal customers drive the new models at customer events at the Red Sea before the media gets the chance to test them. Only in Egypt will you find marketing managers of other car brands 'evaluating' the new Mercedes models in test-drive videos with some 'automotive journalists'.

Only in Egypt will you find maximum one or two test-cars available, but at least one year too late after all the international and regional journalists have test-driven those models already. All of those above-mentioned unprofessional communication and PR / business conducts need to be changed by Mercedes Benz and Daimler as soon as possible.

I am not surprised anymore that Mercedes Benz models have not been winning any important awards or categories recently such as the World Car Award or the Engine of the Year Award, due to this slack and careless business attitude. The fact that there was hardly any professional coverage in Egypt or the Middle East about important events such as the '50 Year of AMG', shows how serious the Mercedes PR & Communications representatives in Egypt are handling those events.

After the huge reputation damage of the German car industry because of the recent Volkswagen emission cheating scandal, this new scandal will surely cause much more damage for reputation of Mercedes Benz and the other German car brands. Such a reputation-damage can be fatal for those brands, especially in the Middle East and Egypt were reputation and image play a huge role when it comes to purchasing decision of customers.

This summer will definitely be extremely eventful and not boring at all with new details about the German carmakers cartel surfacing every day. I am sure lots of managers and directors will be fired before the upcoming 2017 Frankfurt Motor Show in September. Stay tuned with us as we will follow this case very closely.

MS
Wednesday 26.07.2017
Stuttgart – Cairo – Dubai