Driving you round the Benz

Mercedes was once a byword for quality, and its customers the most loyal. Then it all went wrong. But the only way is up for its new chairman says Gavin Green

It isn't just anecdotal evidence from disillusioned Benz buyers, although heavens, there is enough of that. I was a victim, too. My new Mercedes C-class estate was, by some margin, the worst car I have owned, with six unscheduled visits to the (arrogant and lazy) dealer in three disillusioned years of ownership.

Worse for Mercedes, the customer satisfaction surveys backed the gossip. Mercedes plummeted to near the bottom of ownership studies carried out in America, the UK and Germany. It wasn't just trailing its natural premium rivals - BMW, Audi and Lexus. The three-pointed star was frequently behind the mass makers too - the likes of Ford and Vauxhall, and even the Johnny-come-lately Koreans. In one UK survey, the 4x4 M-class was the worst car of all.

Heads rolled. But in the case of Mercedes' supreme boss - DaimlerChrysler chairman Jürgen Schrempp - it took a long time to get him to the scaffold. After pressure from investors, Schrempp finally announced in July that he would be leaving at the end of this year. Company shares jumped 10 per cent.

Schrempp's chairmanship saw much action, but few achievements. He oversaw a lot more than Mercedes slipping from the best quality in the world to near the bottom - as if that wasn't unforgivable enough. He also engineered Mercedes-Benz's disastrous takeover of US mass maker Chrysler in 1998 - which has seen the company's share price fall by almost half. He oversaw an expensive and disastrous alliance with Mitsubishi that floundered just as rival Renault was making a huge success of its Japanese partner, Nissan. The Smart small car business has been a financial catastrophe (although I'm fond of the cars) - overall losses are reckoned at more than £2bn. And the Maybach luxury car brand has been a disaster: sales are a fraction of those anticipated.

So the only way to go, for new boss Dieter Zetsche - moustachioed former head of the Chrysler division, who takes over as chairman on January 1 - is up.

Schrempp's legacy is clearly a large one, but, to loyal customers (and no customers were more loyal than Benz's), the biggest catastrophe of all was Mercedes-Benz's fall into the quality gutter. Mercedes had built the finest cars in the world for probably 40 years, maybe longer. Benz had invented the car. Nobody made tasteful, beautifully wrought, elegantly designed cars as well as Mercedes-Benz.

I bought one almost 10 years ago, a second-hand E-class estate, M-reg, trademark German-racing silver. For four years it provided superb, no-fuss, distinguished transport for self, wife, three small boys and spaniel. I loved its bulletproof build quality, its trustworthiness, its safety, and I loved the feel-good security of driving behind that three-pointed star, sparkling on the grille, standing guard over my family and me. I sold it, to friends, when a company car came my way.

When the company cars ran out, I needed another car and, naturally, we bought another Mercedes. There was no question of buying anything else. We bought a C-class estate from a west London dealer. Not only was the car unreliable, it felt about as solid as a Big Mac carton. Less than three years later, it was gone, with a hefty dose of good riddance (and £15,029 spent regretfully in lease payments).

So where did it all go wrong for the maker of "the best cars in the world"? Back in the 1990s, Mercedes manufacturing processes were old-fashioned and cost-intensive. The result was great quality - at great cost. The upshot was also that Toyota, an exemplar at efficient "lean" production, took less time to make a car than Mercedes took to rectify each fully assembled car. If Mercedes was to stay in business, this could not continue.

Swingeing cost-cutting took place and the whole manufacturing process was reformed. This coincided with the industry trend, keenly followed by Mercedes, to make ever-more complex cars - more features, more gadgets, more complicated electronics (electronic problems, overwhelmingly, are the prime cause of complaints on new Mercedes cars). It also coincided with Mercedes expanding its model range, mostly down market, adding the Smart car, the A-class and the 4x4 M-class (the latter - assembled in a brand new, low-cost factory in Alabama - is probably the worst-made car in Mercedes history). Moving downmarket so often ends in calamity - look what happened to Rover? Add it all together and it spelt disaster.

The good news is that Mercedes knows it, and senior managers acknowledge past mistakes while admitting that the number-one challenge is to fix quality. The three-pointed star is now steadily climbing up customer satisfaction surveys. New versions of the A- and M-class are much improved (the just superseded models were the two dogs of the Mercedes kennel); both are near class-best in craftsmanship and solidity.

Meanwhile, Zetsche, the savvy new head of the Mercedes car division, and - come next year - the head of DaimlerChrysler, too, has promised best-in-class quality. "Our surveys show that quality is now at Mercedes' best-ever levels," claims Zetsche. "And it will get better."

Cost reduction will continue. "But I absolutely reject the notion that lower cost means lower quality," says Zetsche. "If anything, the opposite is true. Good production processes ensure good quality." The precedent is Toyota. It has the lowest costs in the car industry - and the best quality.

So it will not take a turnaround of biblical proportions to transform Benz quality - it's already happening. Restoring the company's damaged reputation, however, will require more of a miracle.