Thanks for joining us today, Horst.
My pleasure, Mike.
Horst, the first question I ask in these, do you call yourself a car guy?
It probably would be difficult not to call myself a car guy after twenty eight years working with Mercedes-Benz. If you want to be more specific, am I a petrolhead? No, clearly not. I love cars. I appreciate cars. I love driving them. I love their design, but I'm not crazy about it and some people ask me is it a good or a bad thing? I think it's actually a good thing because it makes me sometimes in my decisions a bit more independent.
What was your first car?
My first car was a Volkswagen beetle.
Volkswagen Beetle. Classic. You and every other young man in Germany at the time.
Horst, you've been in Australia with Mercedes-Benz for fifteen years now. When you first came here in 2000, did you envisage you'd be here for as long as you have been, and what is it about Australia that captivates you so much?
It certainly was not in my plan. I cam out on a normal three year expatriate contract. I was asked to head up the marketing team and did that. After three years, which was exciting times because the company had started to grow, I was offered a promotion to take over as managing director for marketing and sales in passenger cars.
I was happy to take that because by that time, I had actually, me and my family, we had fallen in love with Australia as a county, with a very exciting marketplace, with great people, with great weather. Melbourne, sometimes... It was very good and a great professional challenge for me and that's how it started and from then it went. I enjoyed what I was doing. We kept growing our brand in Australia. The challenges grew also and so it kept me excited and busy.
Specific to Australia, it's really no contest as to who is the leading luxury brand. How do you explain the love affair between Australians and Mercedes?
I think firstly, there is a general love affair between Australians and cars. Certainly, Mercedes-Benz always has been on people's mind. You're right. We haven't been market leader for a long time and we had always good times, but we also had difficult periods which we had to overcome.
I think success, it certainly all starts with great product and we're blessed with great product but it's more than that. It is also managing the brand professionally. It is building a living great relationships with out dealer network, our business partners. It is making sure that you never become complacent and never take things for granted, but again, it all starts with great product and I don't want to take the credit for that.
That is certainly credit back home to Stuttgart, you know, with our engineers and designers, but then again, this happens around the world and as you said, we are probably one of the markets where we are a market leader so we much be doing something right on top of the great product that we get.
With some of your more mainstream models of today, the A-Class, the B-Class and of course the top-selling C-Class and the new GLC that we see behind us here, you are talking really big sales numbers. Almost the sales numbers of a mainstream car.
I'm curious, how do you balance being a premium brand and having exclusivity, while having a lot of sales as well. Is it sort of a hard balancing acts to keep those two opposable things in line?
I think it is a balancing act, because yeah, sometimes we forget where the word exclusive comes from. It comes from to exclude. From that perspective, an exclusive brand certainly is not for everyone, but what we did, we clearly identified or defined the word exclusive for us and it's as simple as saying we offer the best in every segment.
That is the objective. That's our strategy. From that perspective we haven't run into any problems. I think we are very balanced. We have kept the exclusivity of the three-pointed star life and we have at the same time managed to grow our volumes dramatically. We kept our loyal customers and on the other side, we are currently more than ever before, conquering a lot of new customers also. I think we are pretty balanced and we're getting strategically where we want to be.
Some months you are actually in the top ten, and so far this year, you are knocking right on the door. Do you almost not want to be in the top ten? Does that kind of make it harder to sell yourselves as a premium luxury exclusive brand if you are?
I wouldn't say that. Look, the top ten is basically a result of what happens in the marketplace. You have different competitors who have different product ranges and sometimes one dominates more than the other. We actually don't look at the top ten, it doesn't give us any bragging rights if we are in the top ten.
It's not our objective and on the other side, it's also not our objective not to be in the top ten. We believe if we offer the right products, and manage our brand well, we might or might not be in top ten. It's just a result of the market dynamic so we're not watching that at all.
Daimler board member Thomas Weber told a few of us recently that there's potential to have even more models spun off the next generation MFA platform, so more baby-sized cars. Mercedes already has one of, if not the, biggest model portfolios in Australia. Does it get to the point where it almost becomes a little unwieldy and unmanageable to have so many cars?
We all would like to make life simpler, but unfortunately that's not what happens. We're not bringing cars because we love to complicate our work or bring more models out for the sake of bringing more models. It is a result of customer demand and the fact that we sell substantial numbers of every segment and so do our competitors, we clearly see that there is a demand for all these different variance of products and we will keep bringing more as long as there is demand.
We will not invent a product where we don't believe a customer is interested in it. From that perspective, whether we like it or not, we'll have to manage the complexity which that brings with it. You know? If I look at our salespeople today, the amount of product knowledge they need, the psychological skills they need to navigate a customer through the jungle of product, is enormous. That requires a lot of training, it requires a lot of everything, which we just have to provide.
On the topic of success, Australia is one of the biggest markets for AMG. AMG sales as a proportion of your total range are massive here and higher than anywhere else. Why do Australians love AMG so much? Do you ever envisage a time when Australians might fall out of love with performance cars of that ilk?
I find I've asked myself that question many times. Where does it come from? Fact is, and that's what I realised when I first came here, more than any other nation in the world, Australians love high performance cars. Obviously AMG has a pretty good offering in that segment and regardless of those questionable speed limits, there is certainly more to it than only being fast cars.
They have a certain design, they have a certain noise they make. They just intrigue people. They grab people's emotions and I cannot imagine that this will ever change. We are seeing certain changes already where you can have high performance cars without necessarily having a V8 engine, but high performance cars with all that's part of it, I don't think Australians will ever walk away from.
Care to elaborate on that comment about speed limits?
Certainly, there is a difference between speed and speed. I think for me, a speed limit is important because of certain road conditions. We do have speed limits in every country. Sometimes you question the simple slogan 'speed kills'. I don't think it's correct... I do not advocate unlimited speed at all, but I think a little bit more flexibility and sometimes even less speed in certain parts on the roads and maybe a little bit more speed on other parts would be absolutely sensible.
For me, I think it's a little bit difficult to blame everything on speed only. It's a combination of the right technology, certainly. Good new modern motor cars can do a much higher speed than a hundred kilometres an hour safely, but the most important part for me is great driver education and I think there is a lot that could be done to improve driver education, because higher speed requires a very good qualification in handling a motor car and this is where it's important. And last part not least, also, the condition of roads.
Yeah. I couldn't agree more. To go to the other end of the spectrum, we know Mercedes Benz has a utility coming based on the Navara. Tell us a little bit about that car. How up-market can you really take a ute and what kind of buyer would you be targeting with a Mercedes Benz light commercial?
Look ... A ute is a tradition, it has been for a long time, either a tool of trade or a lifestyle choice. I think we will be offering a vehicle in both areas. We do have in our van segment, we have had tools of trade for a long time. They just do a great job. They are reliable, they are good cost of ownership.
That is one part, but the other thing is the lifestyle choice and I think a ute will be no different to our other range where people just appreciate a luxury vehicle in that segment. It's an expression of their lifestyle. It's their private choice. Whatever they use it for and even if they just use it because it looks good. I think there is room for both the tool of trade but also for the lifestyle vehicle ute.
I know you can't give away anything too specific, but could we see a six-figure ute potentially on the market? Is there potential perhaps for that at the very top end, do you think?
It's early days. We have to start to work on it and it has been officially announced. We, by far, are not at the end of our strategy where we exactly know which variants are we bringing out. Which equipment levels, but I would say never say never. We will see what the market demands. We will see what the early success of when we launch it looks like and then we will make ongoing product decisions.
Horst, you put the Smart brand on ice and I imagine with the currency situation being what it is, that whole business case probably hasn't improved recently, but do you see a time in the future perhaps when the brand might return?
It was actually for me personally, and for my team, it was not an easy decision to put the Smart brand on ice, as you put it, because I believe in this vehicle concept. Further down the track certainly it might make even more sense. Yes, it was difficult to sell it in Australia. Maybe when we launched it, it was a little bit premature. The market was not ready yet.
Then, on top of that, it's the most competitive segment where it's very difficult to ask for a certain price tag and compete against those very low price cars in the marketplace. I could well imagine that further down the track if the circumstances change, that there is a place for Smart again. We will just wait and see. We have not basically decided to discontinue Smart for good. We've just put it on ice, as you rightly said, and we will see what the markets will be doing.
Would you persist with the online sales model that you trialled previously with the brand?
We tried it out because it was actually a good area to test it. It worked to a degree. It didn't go crazy. If Smart ever comes back, we will have to look at the times then. What are online sales models looking like. What does the car industry in general do? How is customer behaviour? It could be, it could be not. I couldn't tell you today.
I just want to touch as your role as director of the FCAI briefly. You guys recently came out swinging against fake counterfeit parts such as dodgy aftermarket wheels. What was the response to that big campaign that you launched? Did it get much traction and did you notice it making an impact?
I think it did make quite a strong impact. Yes, we caught some criticism and some of that was you just want to protect your own business, but on the other side, we received massive feedback where people simply did no know what risks they were taking when buying one of these non-authorised parts.
Safety has been at the forefront of our brand forever since we invented the car and it never stopped. A car is only as safe as its weakest link or its weakest part and if that weakest part is not a genuine part, then customers put themselves at risk without possibly knowing it. That definitely has changed.
There is an awareness already now in the marketplace that we are not just asking a higher price tag on the same part but there is a lot of irresponsible stuff in the marketplace which simply should not be put on any car and especially not on a Mercedes-Benz.
Thank you very much for being with us today, Horst.