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Ten Years for Mercedes-Benz and Dieter Zetsche

Date:01-28 08:56 Authour:He Lun

When the eighth-generation Mercedes-Benz E-Class had its global premiere at the Detroit Auto Show six years ago, Dieter Zetsche, chairman of Daimler Group and president of Mercedes-Benz, answered my questions about competitors by saying that "in the Chinese market, our short-term goal is to surpass BMW in sales and our medium- and long-term goal is to stay as close as possible to Audi". However, two years later Mercedes-Benz was surpassed by Audi in the global market and then left further behind by BMW in the Chinese market. As a result, Mercedes-Benz executives, including Zetsche, stopped talking about their plans to surpass competitors in China, and were reluctant to answer questions on the subject.

Today the new-generation (ninth generation) E-Class had its global premiere at Detroit Auto Show, and Zetsche, in answer to a provocative question about competitors, said "In 2016 and beyond, it's not important how much our sales exceed the competitors. What's most important is to maintain sound growth." The background for this is that Mercedes-Benz has now surpassed Audi and is approaching BMW in the global market, and registered YOY growth of 35% against the general decline in the Chinese auto market, where one competitor had falling sales and the other minimal growth. But in spite of this invigorating performance, Zetsche was more cautious than he was six years ago.

He also explained that "the performance isn't enough to make us proud because current growth is a natural outcome of our hard work, but one thing is important - we cannot get carried away by success or be dispirited by setbacks. We should have faith when in difficulties and be more cautious when things get better."

I don't think Zetsche was being diplomatic, but was speaking from the bottom of his heart. The past ten years have been tough for him and for Mercedes-Benz. Ten years ago when Mercedes-Benz lost the crown of global luxury car sales champion and its cooperation with Chrysler stalled, this tall and slender man with his white moustache was appointed president of the brand to turn the tide, only to see it surpassed by Audi in the global market in 2011. At that time, auto industry insiders ridiculed Zetsche about remaining in his position despite Mercedes-Benz's poor performance because he would have long been fired in any other automaker. However, as a succession of new Mercedes-Benz's models were launched in 2014, the brand displayed robust growth, and people started to sing another tune when talking about Dieter Zetsche - he's finally hit the good times!

Global sales comparison of top three German auto brands 2005-2015

Ten Years for Mercedes-Benz and Dieter Zetsche

When Mercedes-Benz lost second place in global luxury car sales, doubts were cast on Zetsche, but he was not replaced because the board basically approved his approach. What exactly did he do? Answering questions from Chinese journalists, he said "I cannot say that I've done everything right in the past years, but our most important work is to lay a solid foundation, such as manufacturing quality, design, fuel economy, comfort, dealership network, and better branding. Those are the fundamentals that we need to work on step by step. We also need to incorporate new products into our lineup." Those efforts have led to Mercedes-Benz's growing momentum today, which is described by Zetsche as "natural". What's worth special attention is Mercedes-Benz's quality. Ten years ago it lost the reputation as the symbol of "good quality" and was struggling, side by side with Chrysler, at the bottom of the auto quality rankings released by all kinds of professional organizations. However, in recent years Mercedes-Benz has frequently ranked among the top in the auto quality rankings released by such organizations as America's ALG (Automotive Lease Guide), JD.Power, and Consumer Reports, although the ranking dropped a few notches last year. Generally speaking, Mercedes-Benz has re-established its reputation for "good quality".

Another point that's worth stressing is design. Two years ago I read an article in AMS, an authoritative German auto magazine, that commented on a few key points regarding Mercedes-Benz, BMW and Audi. For many years, Mercedes-Benz's score on technology, environmental protection and other aspects has been close to that of BMW and Audi, but the other two brands have consistently scored much higher on design. Mercedes-Benz's design, for instance, the new-generation E-class that just had its global premiere at Detroit Auto Show is like a smaller S-Class, but its elegant style featuring the integration of curved surface, curved line and ridge line and their distinctive family features have been widely hailed in the market. This must first and foremost be attributed to Gorden Wagener, who became Mercedes-Benz's design director in 2008.

As Zetsche told Chinese journalists, "Another critical factor is people. Whether we have the right person in the right position and whether we have an efficient team is critical."

The "right person" is reflected in Mercedes-Benz's China team. Nicholas Speeks (president of Beijing Mercedes-Benz Sales Service Co., Ltd., known as BMBS), Li Hongpeng (senior executive vice president) and Duan Jianjun (executive vice president) are called the "three chariots" and "golden team" of Beijing Benz. If it wasn't for this golden team, if Hubertus Troska, chairman and CEO of Daimler Greater China Ltd., hadn't given free rein to the "three chariots", Mercedes-Benz wouldn't have been able to resolve their serious problems of 2012 and achieve the "exceptional" performance of today.

Sales comparison of top three German auto brands in Chinese market 2005-2015

Ten Years for Mercedes-Benz and Dieter Zetsche

Of course Dieter Zetsche may be the most important of the "right people". His contract has been extended to 2019. Talking of the future, the 61-year-old remains cautious. "We've accomplished all our business goals so far, but I don't think we've made corresponding strategies and full preparations for what the company will become in ten years' time. Topics such as powertrain and Industry 4.0 are going to be very important over the next 20 years… In the past few years, we've made progress on intelligent driving every year, and have presented a new car every year. In my opinion, completely automated driving may appear in the next decade, probably in 2020."

For the Chinese media, Dieter Zetsche is a concise, straightforward and amiable interviewee who always gives you something real. He may be the multinational automaker boss who is most often interviewed by the Chinese media - two or three times a year - whereas Martin Winterkorn, former chairman of VW who recently resigned, went to the other extreme and has had no communication with the Chinese media since 2010.

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