JEDDAH, 11 April 2004 — Mercedes is moving ahead after facing challenges with the introduction of new technologies and the merger with Chrysler, said Professor Juergen Hubbert, board member of DaimlerChrysler AG since 1998, while in Jeddah on a tour of the Gulf.
Hubbert said that as the leading innovator in the automotive industry — having introduced over half the innovations in cars in the last hundred years — new technology always presents challenges, even for his competitors.
“We had to introduce electronic devices at a speed faster than expected. We had to learn to handle the electronics as good as we handled the mechanical aspects,” he said. Competitors who entered the development race later were able to capitalize on the innovations. “It was a risk and we were hurt by it,” said Hubbert, “but we have solved the problems.”
The much-publicized merger of Daimler Benz and Chrysler is still a source of comment and legal action. A judgment on the merger is still pending in a US court.
“It’s an open case — so we are just waiting for the judgment. We know we are in a good position because we never cheated,” said Hubbert. He affirmed that everyone in the negotiations was fully informed of the situation.
The Mercedes division head said the merger did not dilute Mercedes’ brand image or weaken either company. Automotive companies around the world are consolidating and strength comes from merging with a strong partner.
This echoes the view of Tomas T. Stallkamp, the ex-chairman of Chrysler who in a interview with the University of Michigan Business School, contended that “It was not a takeover, but a merger of equals. There is substantial over-capacity worldwide in the industry and only a few major players have the resources to survive.”
Hubbert dismissed fears that the merger might have a deleterious effect on Mercedes. He said that the strategy of the company is to keep the Mercedes brand as it is.
Last year, Mercedes alone turned in an operating profit of $3 billion.
He commented that in the past, the company had given components to other brands to speed up the production of new products, “but now there is no exchange of platforms from Mercedes to other brands. Whoever buys a Mercedes will get a Mercedes.”
Innovations from Mercedes will penetrate into the other brands, however. “You might see 10 different products coming from Chrysler this year with technology that makes them different from GM and Ford,” he said. Turning to regional matters, Hubbert saw the Gulf as increasingly important. With sales of 17,000 cars per annum in the region, he saw a bright future here.
“In some areas we have to be more aggressive than before. The region is developing at a speed I didn’t expect. We have to make sure we can match the speed with our activities.”
Mercedes is facing a challenge from Asian luxury cars in Saudi Arabia, as well as in the US and Asia. Lexus for example, sells more cars in the US than Mercedes.
Hubbert admitted to taking the competition seriously. “The key thing in the future will be design as the technical differences are coming closer. We must make a better product and differentiate it with design, technology and quality,” he said. “So far, Lexus has been successful in the USA but not in Europe.”
Hubbert said years ago “the best or nothing” was the company creed. This was dangerous as engineers could price the cars out of the market. “Now we want to produce the best cars for the customer and meet his demands better than others. Now it is ‘the best for the customer,’ at a competitive price.”
Mercedes is also recognizing the influence women have over the choice of a new car. “We have just employed six females — all Saudi nationals - for sales and we are at the moment in the process of training them,” Hubbert revealed.
There are female members of staff already working in workshops in the Gulf area, where they work under the laws of the country, “but they get their hands dirty.”
“I saw for the first time in my life a service station that has a special entrance for ladies — and special service for ladies, organized by one of our partners,” he said, indicating that there is a subtle change in the recognition of buying habits.