The problem is over the longer term if they want to maintain premium.
MB get the advantage of being a premium brand over the likes of Ford, Renault, or Nissan. In the short term stuffing a Renault engine under the bonnet won't make a difference. Over the longer term people might start asking why they are paying a premium.
VW/Audi gain and lose from parts sharing. Audi can command a premium over VW to some extent. But BMW and MB still stand higher. (OTOH VAG probably save quite a bit on development and economy of scale by reusing their parts and platforms.) The more parts MB share the more risk they carry of losing their premium over the likes of Audi and even VAG. And the risk is that even if this is just the A and B class models that are tainted that the taint moves further up the product lines - the C will be sharing a Renault diesel which raises the rsik further.
Cars like the Mondeo are very good. If Ford stuffed the ZF 8 speed box in the Mondeo with a 2.0 litre engine then where do MB stand with say a Renault engine and the 7G+ box? Well it only takes a few influential journalists to start talking up the Mondeo (like they do with the Focus) and people will ask whether the C is worth the premium over a Ford such that within a few years MB are having to pedal very hard to fix the damage.
Can't fault your logic, but I think Mercedes have already set their path with value engineering of their cheaper models, and there is bound to be a gradual shift downwards in brand perception. (I'm a loyal and enthusiastic supporter of the brand by the way, and likely will continue to be).
However, I think all others (premium brands) will have to follow a similar path. The reason why I quote 'sentiment' is to do with what would be considered a core and branded component. No one expects Mercedes to make the batteries or tyres themselves, so why the engine? Maybe so in the old days, or in AMG versions, but now as we head towards, electric drives, hybrids, etc. how critical is the brand of the power plant itself?
As a challenge to this, we have of course the issue of premium in-car hifi, and the need to use hifi brand names to sell an £800 upgrade. Maybe this will go the same way with power plants, and only the 'Engineered by AMG Sport' models will have a unit that will carry an MB brand, as in effect be an option.
We must also consider the globalisation of production, and the same factory in China, if not already, will be producing Mercedes brand engines on the same line as one's for Dacia maybe. Don't foget the Crossfire was built side by side with the SLK.
There is a natuaral tendency to assume a 'Renault' sources engine in less premium or durable than one from Mercedes. I'm not sure a certain Mr Vettel would agree
