Wilhelm Maybach is turning over in his grave. Daimler CEO Dieter Zetsche has announced that the super-luxury brand that carries the famous inventor/engine designer's name will be terminated. The death comes at a really odd time. This year Daimler is celebrating its 125th anniversary and is predicting record profits.
Daimler will write off the billion-plus euros already invested in Maybach since it was created by Zetsche's predecessor, Jürgen Schrempp, in 2002.
Daimler seems unafraid that this move will reduce the Mercedes Benz Cars group to just two brands: Mercedes-Benz and Smart.
The Maybach brand only survived nine years and, honestly, it has been a dead-man walking for a while. Last year, Maybach sold 157 cars. Meanwhile, BMW's Rolls-Royce subsidiary boosted sales 171 percent last year to a record 2,711 cars.
Daimler did a miserable job exploiting the potential in the super-luxury segment – and now finds itself at risk of never being able to compete in the growing segment. There are more and more millionaires and billionaires who do not want to drive a car that has the same brand on the hood as an A class or B class.
Rolls-Royce CEO Torsten Mueller-Oetvoes recently told me how fast the number of super-rich in the world is expected to grow: "There are currently about 90,000 ultra-high net worth individuals and in 10 years we expect this to grow to 125,000. That fact alone makes me optimistic about our prospects."
Mueller-Oetvoes expects up to 10,000 Rolls-Royce sales a year in the long-term future.
Zetsche thinks he can address these ultra-rich customers with six variants of the next Mercedes flagship S class, which will be launched in 2013. In addition to the current coupe, short and long version, internal sources expect a convertible similar to the stunning Ocean Drive concept, a super-long S-class version of about 6 meters in length and a super-super almost 6.8-meter-long variant that will get the Pullmann name and serve politicians, especially heads of state.
The death of Maybach is bad for Aston Martin as well. The prestigious British brand led by Ulrich Bez was hoping to get an order from Stuttgart to develop some variants of the next-generation Maybach.
Of course, Zetsche's decision also brings some advantages. Maybach has been a bottomless money pit. In the future, those Maybach euros will be invested in improving the core Mercedes brand.
It is a painful decision but one that Zetsche must have thought needed to be made. Of course, that is no consolation for Wilhelm Maybach, whose huge contributions will no longer be honored by keeping his family name alive on the company's future products.
It is, however, a lesson for the entire industry: Brand heritage is crucial. You can spend as many billions as you'd like to create a new brand like Maybach, but you will never be able to successfully fight established century-old brands like Rolls-Royce.