Not the Synergy We Were Looking For

We heard plenty of “synergy” talk when Daimer-Benz AG acquired Chrysler Corp in 1999. But one synergy Daimler definitely wasn't looking for was to share Chrysler's reputation for slipshod quality.

Now it comes to light that DC's warranty costs are soaring, and it appears that defects in the highly regarded Mercedes 3.2L V-6 engine — the German automaker's first V-6 ever — may be partly responsible.

DC's stock price was hammered on May 8 when the Financial Times reported that the German automaker's warranty costs have tripled in two years, costing the group 1.7 billion euros ($1.5 billion) last year. The introduction of the compact A-Class and the M-Class sport/utility vehicle reportedly have contributed to the quality problems, adding that the German company is spending almost 2,500 euros ($2,204) on warranty costs on every M-Class sold.

The M-Class has scored poorly in numerous independent quality surveys, but there may be a serious problem with its most expensive component: the engine.

Sources at several Mercedes-Benz dealerships say they are replacing V-6 engines on M-Class SUVs — which debuted in the '98 model year — at the rate of three to four per month. However, some other dealers contacted say they have not run into the problem, which starts with excessive oil consumption.