Mercedes’ new U.S. boss faces market challenges

Industry

LOS ANGELES — Mercedes-Benz plans to roll out 10 electric vehicles by 2022, beginning with a battery-powered compact crossover to arrive in the U.S. early next year.

But developing the market for the technology in the U.S. will be a challenge initially, Mercedes’ new U.S. boss, Nicholas Speeks, told Automotive News at the Los Angeles Auto Show.

“There is no huge natural demand for electric vehicles in the United States,” said Speeks, who most recently ran Mercedes’ business in China. “People are perhaps a little bit hesitant in going away from something that they have known for the last 130 years with the combustion engine. There’s some anxiety about range — where am I going to charge it, and how does it work?”

But putting Americans behind the wheel of EVs will go a long way in helping sell them, the cravat-wearing Briton said in his first series of media interviews. “Experience will help us,” Speeks said. “Getting cars on the road, having people speak from experience about electric cars will be helpful.”

For EVs to have broader consumer appeal, he said, they must be marketed on performance, not just their green credentials.

“It’s very much a question of — can we present the cars not necessarily in terms of the environmental impact, which is important, but because they’re just great cars?” Speeks said.

EVs as “fun to drive” is the message Mercedes hopes to deliver with its debut EQ model. The 402-hp, dual-motor EQC has a range of about 280 miles, based on European emission standards, and is capable of a 0-to-60-mph sprint in 4.8 seconds.

“We will have a range of cars which are appealing not solely by virtue of the fact that they have this alternate drivetrain, but by virtue of the fact that they are great cars,” Speeks said. “We will gradually ramp up, and we will make sure that we are positioning those cars at a point where people can afford them.”

The EQC starts at $68,895, including shipping, and will be available nationwide at launch. Mercedes expects about 60 percent of early demand for the EQC to come from the West Coast.

Speeks, who has done tours of duty in Japan, Dubai, Vietnam and Germany for Mercedes, took the top job at Mercedes-Benz USA in September. He is credited with growing Mercedes’ China business at a 20 percent annual rate. Under Speeks’ stewardship, the brand’s premium-vehicle segment share there rose from 17 percent in 2012 to a 24 percent forecast for this year. An encore in the mature U.S. market will be a tougher ask. Mercedes’ share of the U.S. premium-vehicle market has fallen 2.4 percentage points since 2016, according to the Automotive News Data Center.

Getting the product right will be key to Mercedes’ success in a slowing market. The focus is to have cars with the content and features that customers want, Speeks said. “We have to make sure that we are clear about what the trends might be, and that we see four, five, six years ahead that we are going to have vehicles that meet whatever market demand we think is going to be around at that time,” he said.

As the U.S. market is slowing, Speeks will be running a leaner organization. Mercedes parent Daimler plans to slash head count at its Mercedes-Benz cars division to help manage the disruptive shift to self-driving and electric cars. After multiple profit warnings this year, Daimler said it plans to slash spending by about $1.1 billion by the end of 2022.

“We are a major constituent part in the sales and marketing organization we have globally, so we will do our part,” Speeks said of the U.S. arm.

While declining to reveal details of how Stuttgart’s cost cuts will play out at MBUSA’s Atlanta headquarters, Speeks said, “It won’t necessarily be a painless journey, but it behooves us always to ask if we are being at our most effective and most efficient in pursuing whatever objectives we have.”

Success also hinges on relationships with dealers, Speeks said.

“What I want from dealers is a sense of their ambition. I will need their energy and their guidance in many cases, being new to the market,” he said.

Speeks is known to be a tough operator with the brand’s retailers. In early 2013, he put independent Mercedes-Benz dealers in China on notice for not meeting sales targets, despite the company lowering them 30 percent from the prior year.

“Your performance as dealers worries me,” he wrote at the time. “A telemarketer in a call center could achieve these low sales volumes.”

While in China, Speeks grew the dealer network rapidly. Between 2014 and 2016, the brand was opening two dealerships a week.

“A big lesson there was that anything we’re going to do in a market, we have to do together with our partners, who are on the front lines and represent our brand to our customers,” he said. “If we cannot enlist the talent we have in our retail network — and they are considerable — then it will be a much harder, if not impossible, journey.”

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