30 years ago Dietmar Exler was at law school at the Johannes Kepler University in the Austrian city Linz. The car he drove back then was a green Citroen 2CV Dyane with 28 HP. “That was all I could afford back then”, he remembers. “I was pretty happy to have a car. It worked well and I repaired it plenty of times myself with the help of a couple of friends who were mechanics.”
“Of course I could still drive a car like that with a column-gearshift”, Exler says. Thing is, he doesn’t have to. The car he is driving now is an exciting 621 hp missile that speeds up to 100 km/h in mind-blowing four seconds. It’s a silver-colored Mercedes-Benz SL convertible, a two-seater with red leather interior. “It is one of the most exciting cars we have”, Exler says and driving it on the winding roads in the hills of Georgia with the roof open, the wind in the hair and the music playing is one of his great pleasures. “The area reminds me of the Mühlviertel back home in Austria”, he says. Only that Georgia’s climate is way milder and Exler opens the roof of his convertible almost every day.
How came that the Austrian is now driving a Mercedes-Benz? After graduating he moved to Detroit where he began working for McKinsey. In 2002 he was enticed by Daimler and after having worked in the company’s headquarters in Stuttgart for a couple of years he became head of sales for Mercedes-Benz in North America in 2014. By the beginning 2016 Exler was announced as the new CEO of Mercedes-Benz North America, a company with about 1500 employees and a net of 373 dealers. In an exclusive interview for trend Exler shares his thoughts on the future of mobility and the US automobile industry.
"Being the biggest player is not of any value. Nobody buys one of our cars because we sell more cars than our competitors." Dietmar Exler, CEO of Mercedes-Benz North America, talks about the future of mobility and the US automobile industry.
The US automobile industry has just recovered from its most severe crisis with Chrysler and almost all of Detroit going bankrupt in 2009. Last year, in 2015, sales broke a new record. How do you see the current situation?
Dietmar Exler: If you go back to 1999 to 2007 16 to 17 million units were sold per year. Then sales dropped to 13 million and a year later to ten million units. From 2009 to 2015, the market grew by a million units a year up to about 17.5 million in 2015.
This year we actually expect the industry to be roughly around where it was last year. The time where the market grew by a million units a year like it has been in the last six years that may be over for now. The market cannot grow forever at a rate like this. But even if we stay at 17.5 million units, that’s a pretty healthy volume overall.
So the competition is getting tougher again?
Exler: Definitely. The dynamics in the marketplace change. It’s not more cars being sold. If you want to sell more you have to compete with other manufacturers and take market shares from them. Yes, the competition is getting tougher. In the luxury segment our main competitors are BMW, Lexus and Audi but with our new product line we are in a terrific shape. We are leading the luxury market in the US.
Sales figures show a decrease for total car sales among almost all of the manufacturers and an increase among trucks and domestic trucks.
Exler: Just to make sure that there is no misunderstanding: The figures for truck sales include pick-up-trucks and SUVs. And the demand for SUVs is constantly rising. That has been going on for two years now. Fortunately we are also doing extremely well in this segment. We were extremely successful with the GLC model on the SUV side. That car changed the mix. We have a lot of customers that were driving passenger cars before.
The reason is pretty much a lifestyle-preference, a customer choice. That’s just what people like right now. There is not a lot of logic or reason behind it. Just to add, low fuel prices certainly help, and overall, Americans love the added utility of trucks and SUVs. The passenger car market is still big. Depending on the manufacturer they are just short of 50 percent. But right now SUV’s are really strong in the US.
The new Mercedes-Benz GLC 2017.
A large part of the new cars sold in the US are financed by credits. The volume for car-credits has reached a new peak of a trillion US Dollars. Some analysts are worried that this might lead to a new subprime crisis in the near future. Do you see that problem too?
Exler: The US market has always been a market where consumers financed or leased vehicles. Buying cars cash is much less common than in Europe. And the volume is particularly strong now due to the low interest rates. We have interest rates below one percent, so people ask themselves why they should pay cash.
At Mercedes-Benz subprime credits are not really a topic. We don’t have many subprime-customers but I also haven’t heard that there might be a big problem imminent at the time being.
Mercedes Benz’s position in the US market seems to be rather stable, with an overall market share of about 2.1 percent. How satisfied are with that share?
Exler: That is correct. But in the luxury market we have a share of 20 percent and more, depending on the region. In the Northeast region our market share is 23.7 percent, in the western region 25.5 percent. The important question always is which player you consider as luxury car manufacturer or not. Our market share is measured against BMW, Acura, Infiniti, Jaguar, Lexus, Volvo and other smaller niche manufacturers.
In our top regions, the New York area, Orange County – from Los Angeles to San Diego – and South Florida - the greater Miami area, our market share is even higher, about 30 percent. But being the biggest player is not of any value. Nobody buys one of our cars because we sell more cars than our competitors. If you outsell the competition obviously the customers like your product better, your market approach and your dealers better.
About year ago the Dieselgate affair at Volkswagen hit the news. Has his scandal affected the image of car manufacturers, especially German and European?
Exler : I cannot comment on the impact it had on Volkswagen but I do not think that the image of Mercedes has suffered. Customers know how to distinguish brands. We did not have any worried customers calling us.
Did you notice a decline in customer’s interest in the diesel models you offer?
Exler: Diesel has a different position in the US than in Europe. Only two to three percent of the cars we sell in the US are diesel cars. The market is so small. From a sales perspective this is not a topic for us.
Even if the future of the diesel engine does not affect you – stricter emission laws do. All manufacturers are looking for alternatives to the combustion engine. Electric powered vehicles, fuel-cell-powered ones or the future study F015 that Mercedes-Benz has showcased – where are we going to?
Exler: We will go forward and push electric engines. At the Paris Motor Show in October we will show a new electric vehicle architecture. We have announced a new range of electric vehicles. Electric vehicles are not a European or an American issue. This is a worldwide push by Mercedes to get into the electric area. These cars are from the bottom designed as electric cars and SUVs, different models with full electric capability. Predictions on sales figures are hard to make because we do not know what the competitors are working on. There are all kinds of announcements from different competitors, but they are all very cautious when it comes to details or release dates. At Mercedes our objective has always been to be the leader, and we are going for that position in the electric field.
"Generation EQ": Mercedes-Benz gives a glimpse of tomorrow's electric models at the Paris Motor Show 2016.
New technologies make new competitors. One of them is Tesla. The company, which Daimler held a stake in until 2015, has reportedly sold more Model-S cars in the US than Mercedes-Benz S-class models.
Exler: Probably. If you only compare numbers. But Tesla S is not a single model but a wide range of different models with a price range that starts way below our S-class and goes up to the S-class. They start at about $ 60.000 with the entrance model and go up. Our S-class models start to sell at about $ 90.000. That’s quite a difference. It’s difficult to compare cars with a price difference of $ 30.000. It’s just apples and oranges. And the price range of the Tesla varies greatly based on the model.
Until the end of August Tesla sold 23.000 cars in the US in 2016, 80 percent more than in 2015. Is the US market now ready for electric vehicles?
Exler: If you offer a model that has an attractive design and convincing performance then I think you have strong customer demand. That is pretty true for electric as well.
There are a lot of other alternative engine concepts aside electric which the manufacturers are working on. Which of them is the most promising?
Exler: In the near future, which is the next ten years, it’s probably electric. If you go with hydrogen it depends what you use the vehicle for and of course the available hydrogen infrastructure. If you happen to have a hydrogen gas Station around it’s a total different picture. As for today hydrogen or liquefied gas works for instance within public transport, busses that return to the same depot at night. It’s completely different if you are in sales and go around all over Europe. In the long term hydrogen might be something very promising. But I’m not an engineer.
Another promising evolution comes from the self-driving technologies that become more and more incorporated in cars. We now have lane-assist, brake-assit, front-assit and more assistant-systems. Do you think self-driving vehicles will be common in the near future?
Exler: I believe we are getting there. But there are two challenges that we still have to figure out. One is on the technical side. For example if there is snow on the ground. A human knows that when driving where the road ends but does a vehicle know that? Or when it rains and traffic lights are reflected, for instance from parked cars. These reflections are still a little tricky to identify for machines. But the engineers will figure that out. That’s just a question of time.
The second and more interesting question is the machine-human-interface. Two examples: You are driving and a person steps on the zebra-crossing ad is waving. If you are driving you know if the person is waving you by or is waving at the cab behind you. The machine does not know how to interpret this.
Another tricky thing is human behavior in traffic. Legally you are supposed to keep a safety distance from the car in front of you. If you have slow moving traffic you are supposed to keep a distance of at least one car from the car in front of you. But if you do that in tense city-traffic it means that somebody will cut you off. So you drive closer or you will be cut off the whole time. Now the problem with self-driving cars is that we cannot program a car so that it violates traffic rules by definition. So the autonomous car will keep a distance and somebody will cut you off. The car will again keep a distance and somebody else will cut you off until you will go screaming nuts. We have to deal with human behavior in situations like that.
Showcase: Mercedes-Benz F 015
So there is no easy solution at hand?
Exler: It would be very easy if at the same time all the cars on the road were autonomously driven. Then it would only be machine to machine communication. But we will have a long period where self-driven and human-driven cars will be on the roads together. And that interaction will be fascinating to see.