DaimlerChrysler to Postpone U.S. Launch of Mercedes-Benz Sport Wagon

FRANKFURT, Germany February 7, 2005; Melissa Eddy writing for the AP reported that DaimlerChrysler AG is delaying the U.S. launch of its Mercedes-Benz B-Class sport wagon over concerns that the weak dollar would eat too deeply into profits, the automaker said Monday.

The compact four-door hatchback was to have been brought out in North America this year, DaimlerChrysler spokesman Toni Melfi said. But the company has decided to bring the vehicle out in Canada and Mexico as planned but wait to introduce it to the United States.

"Given the current dollar-to-euro relationship, the launch is being delayed for now," Melfi said.

The move comes just weeks after DaimlerChrysler presented the car at the North American International Auto Show.

The euro rose from around $1.20 in September to an all-time high of $1.3667 at the end of December over concerns about the increasing U.S. trade and budget deficits. It has since been trading around $1.30, but many analysts think it still could hit $1.40 this year.

The weak dollar has been good for U.S. exports by making them less expensive for overseas customers, but has the opposite effect on euro-zone goods, making them more expensive in the United States or eating into manufacturers' profit margins as they try and keep prices steady.

The B-Class Mercedes is to be built at DaimlerChrysler's factory in Rastatt, Germany.

Melfi declined to say when the launch would take place, but stressed that the exchange rate had to be "substantially better."

The delay in the B-Class's U.S. launch reflects the sensitivity of the Mercedes division to foreign exchange rates. It also suggests that the Stuttgart-based car maker is uncertain about the small wagon's prospects in the U.S. market.

Mercedes, which is in the midst of an earnings slump, will release fourth-quarter and 2004 results on Thursday.