Fiat-Merc small car agreement fails; Daimler expected to join BMW and PSA
26 November 2007

Mercedes-Benz has ended talks with Fiat on the establishment of a joint venture for the production of a new range of small cars. According to Autocar sources, Mercedes-Benz analysts considered the cost advantages of a co-operation with Fiat were too slim following weeks of internal studies aimed at seeing the next-generation A-class and B-class models twinned with cars such as the future Punto and Bravo.“The Italians produce small cars at a greater cost than we do,” a senior Mercedes-Benz manager said.As part of the cost cutting CORE program instigated by chairman Dieter Zetsche, Mercedes-Benz has been actively seeking a partner to share the costs of developing a successor to its existing entry level A-class line-up, and had been banking on Fiat’s expertise in the small car segment to bring a major boost in efficiency.However, differences in engineering and quality are said to have been at the root of problems that has seen the German car maker break off official talks with Fiat.The move once again opens up the possibility of a link up between Mercedes-Benz and long time rival BMW – both of which are seeking partners in a bid to reduce the cost of small car production.BMW chairman, Norbert Reithofer, has confirmed contact between the two car makers at board member level but insists no firm details have yet been discussed.One distinct possibility, according to industry analysts, is Mercedes-Benz being brought into the four-cylinder engine program established between BMW and Peugeot. There has also been speculation that the next-generation Mini and A-class could share a basic front-wheel drive platform architecture.

Greg Kable

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26 November 2007

“The Italians produce small cars at a greater cost than we do,” a senior Mercedes-Benz manager said.

Just bruised my chin on the desk when my jaw fell open at this. Profit margins on the A-class must be pretty healthy if they can make them cheaper than a Bravo...

27 November 2007

I can't believe this. Fiat are the originators of producing small cars at competitive prices, how can Mercedes build an A Class cheaper than a Punto.

Is there something we are not being told?

28 November 2007

[quote Kee Law]

Perhaps they've learnt from the Smart car? That sells for Panda prices.

[/quote]

And has lost them millions!!!!

Where as the Panda sells for Panda prices and makes money.

Who knows how to build small cars?

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