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DaimlerChrysler Recalls 1.3 Million Mercedes Vehicles
By REUTERS Published: March 31, 2005
FRANKFURT, March 31 (Reuters) - U.S.-German carmaker DaimlerChrysler is recalling 1.3 million Mercedes cars as it tries to fix quality issues that are riddling its German luxury car division, it said on Thursday.
In its biggest ever recall, DaimlerChrysler will recall the Mercedes cars in several model ranges worldwide to fix problems with alternators and batteries. They do not affect the cars' safety, according to the supplier, car-parts maker Robert Bosch.
Mercedes chief Eckhard Cordes, who said earlier this year that his drive to resolve the quality problems would hit this year's earnings, said the cars Mercedes now makes are of high quality and that the recall addressed legacy problems.
"We are now producing the best product quality ever and our aim is to ensure that those vehicles in the hands of customers which are the cause of complaints achieve a standard of quality that reflects our highest expectations," he said in a statement.
DaimlerChrysler declined to say how much the recall would cost but Georg Stuerzer, an analyst at HVB Group in Munich, estimated it could be in the hundreds of millions of euros.
"On this kind of scale I expect the cost to run into the three-digit million-euro range. The quality campaign will weigh further on the company's first quarter," said Stuerzer, who rates the stock "outperform" with a price target of 39 euros.
Shares in DaimlerChrysler dipped after news of the recall, paring earlier gains to trade up 0.1 percent at 34.51 euros by 1417 GMT, in line with the blue-chip DAX index, which was 0.2 percent higher.
Mercedes said it would check and if necessary replace the voltage regulator in the alternator on vehicles with six- and eight-cylinder petrol engines built between June 2001 and November 2004 in the recall.
The carmaker will install new battery-control software on E-class and CLS-class models made from January 2002 to January 2005. In addition, it will update the braking system on current E-class, SL-class and CLS-class models, made since June 2001.
Mercedes has traditionally been Daimler's most lucrative business, but a collapse in profits at the division caused DamilerChrysler to miss analysts' expectations for fourth-quarter profit.
Mercedes' profits have been hit by a strong euro, the cost of launching new models, and increased spending to fix quality problems, as well as losses at its Smart minicar brand, for which it is working on a strategic review.
By REUTERS Published: March 31, 2005
FRANKFURT, March 31 (Reuters) - U.S.-German carmaker DaimlerChrysler is recalling 1.3 million Mercedes cars as it tries to fix quality issues that are riddling its German luxury car division, it said on Thursday.
In its biggest ever recall, DaimlerChrysler will recall the Mercedes cars in several model ranges worldwide to fix problems with alternators and batteries. They do not affect the cars' safety, according to the supplier, car-parts maker Robert Bosch.
Mercedes chief Eckhard Cordes, who said earlier this year that his drive to resolve the quality problems would hit this year's earnings, said the cars Mercedes now makes are of high quality and that the recall addressed legacy problems.
"We are now producing the best product quality ever and our aim is to ensure that those vehicles in the hands of customers which are the cause of complaints achieve a standard of quality that reflects our highest expectations," he said in a statement.
DaimlerChrysler declined to say how much the recall would cost but Georg Stuerzer, an analyst at HVB Group in Munich, estimated it could be in the hundreds of millions of euros.
"On this kind of scale I expect the cost to run into the three-digit million-euro range. The quality campaign will weigh further on the company's first quarter," said Stuerzer, who rates the stock "outperform" with a price target of 39 euros.
Shares in DaimlerChrysler dipped after news of the recall, paring earlier gains to trade up 0.1 percent at 34.51 euros by 1417 GMT, in line with the blue-chip DAX index, which was 0.2 percent higher.
Mercedes said it would check and if necessary replace the voltage regulator in the alternator on vehicles with six- and eight-cylinder petrol engines built between June 2001 and November 2004 in the recall.
The carmaker will install new battery-control software on E-class and CLS-class models made from January 2002 to January 2005. In addition, it will update the braking system on current E-class, SL-class and CLS-class models, made since June 2001.
Mercedes has traditionally been Daimler's most lucrative business, but a collapse in profits at the division caused DamilerChrysler to miss analysts' expectations for fourth-quarter profit.
Mercedes' profits have been hit by a strong euro, the cost of launching new models, and increased spending to fix quality problems, as well as losses at its Smart minicar brand, for which it is working on a strategic review.
) and only had to replace tires x 2 (~$1200), battery ($90) and power steering pump ($300). Zero down time so far and no warranty work needed. It is time for timing belts to be replaced though.
