Mercedes in Overdrive

Most German automakers have been speeding along in reverse this year. Turned back by the country's recession, auto sales have retreated 19% from last year's peak, and exports have skidded by 14%. Yet at the Stuttgart works of Daimler-Benz A.G., where 80,000 employees are rolling out more Mercedes than ever, the industry is on overtime and in overdrive.

Mercedes auto sales have raced past the rest of Germany's standstill economy, are running 5% ahead of their 1966 level of 191,625 cars. By year's end, sales of the company's cars, as well as its heavy duty trucks, buses and engines, which account for more than 40% of its business, should easily match last year's record $1.26 billion, yield more than $20 million in profits. And its exports to 160 countries will rise by 9% to 100,000 cars. Recession? Scoffs Dr. Joachim Zahn, Daimler's 53-year-old chief: "We at Mercedes were ready for it."

The world's oldest existing automaker -Daimler cars first appeared in 1886 --Mercedes' preparations have been as solidly engineered as its cars. Going into 1967, the German industry was hit not only by the general business slump but also by a sharp change in the home market; as the once big postwar pool of first-time buyers emptied, automakers had to adjust to the slower pace of replacement sales. Going against the trend, Mercedes has aimed its 15 high-priced, high-performance models which hold 7% of the German market, at "men who have achieved something."

Thus its customers, ranging from the burghers who buy $2,750 Model 200 sedans to the big business "Herr Direktors" who cruise in 20-ft., $16,000 Grand Mercedes limousines, are least hurt by the recession.

Ironically, Mercedes has also been getting a lot of speed from its go-slow policy of production, which has never quite matched demand. A big item in its current surge is its Model 250 sedans, which boast 2.5 liter engines and price tags of $4,000 and up. Introduced in early 1966, the popular 250 drew a two-year order backlog. That has kept production humming while competitors like Volkswagen have been forced to cut back.

Preparing for a consumer comeback next year, Mercedes is readying a new line. Though the company is keeping quiet about details, the new line will have more power than the 105-h.p. 200s, appear without the rear-fender fins that Mercedes picked up from Detroit in 1959.

Meanwhile, the company plans to keep up a marketing push that, for all of Mercedes' staid image, has become truly muscular. Deciding that his company ought to do better in the "world's toughest market," Mercedes' Zahn ended a U.S. marketing deal with now-defunct Studebaker-Packard in 1965, built up an independent network of 260 dealers. By carefully watching car-buying tastes in the U.S.--where 85% want automatic transmission (v. only 40% in Germany) and 65% ask for air conditioning (v. less than 1%), Mercedes has increased its American sales by 25% this year, to 20,600 cars, now accounts for half of all U.S. imports tagged at $4,000 and over.

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