Cannon: New Mercedes product will mean sales record
AUTOMOTIVE NEWS: Will industrywide incentives increase this year?
STEVE CANNON: Incentives are dropping. There is always the dynamic in the car business that when you add up all of our plans it generally adds up to something in excess of the market. But so far we have seen a fair amount of restraint across all of the makes, so it is profitable growth. I am not worried about an incentive war.
Mercedes-Benz USA CEO Steve Cannon expects sales to grow about 10 percent this year, which would mean surpassing the brand's peak of 253,277 units in 2007.
Mercedes sold 245,192 vehicles last year in the United States, making it the No. 2 luxury brand, behind BMW -- but ahead of Lexus.
Cannon, 51, who moved to the top job in January from vice president of marketing, says new product is the key to growth this year, including the second-generation GL SUV that was unveiled at last month's New York auto show.
He was interviewed in April by Editor Jason Stein and Staff Reporter Diana T. Kurylko.
Q: How will Mercedes-Benz do this year in the United States?
A: We are outgrowing the overall market and we are outgrowing the luxury market and it's on the back of volume products like the C class, the C coupe and the M class. We were fortunate. We are launching volume product just as the market started to tick upward. If you launch a niche product, it's going to help but it is not going to drive your numbers.
Have you met with the National Automobile Dealers Association about facility standards and the Glenn Mercer report?
We met and we listened to the report. We have to respect the amount of money that dealers are spending on facilities and we can't be frivolous with our requests. Changing the color of the sign for the sake of changing the color because someone in Stuttgart decided this pigment of blue is a little bit better and a little more serious than the previous pigment, and that would require a $40,000 signage change -- we are not going to do that.
We had an issue that needed to be resolved. The brick-and-mortar expression for our brand at retail was a dog's breakfast. It was everything -- a little bit of this and that. For our brand, it's "the best or nothing" and you cannot be operating with that kind of tag line in substandard facilities.
In some cases we had some dramatically substandard facilities. We have gone through it and even some of our most ardent opponents in the dealer body have come around. [Looking back, they] said, "Didn't want to do, didn't want to believe it, I wasn't ready for the investment" -- certainly not in 2009, as the market was still on tenterhooks.
But now for the most part, there is peace in the kingdom despite going through this $1.4 billion investment, which was not easy. Our NADA [dealer attitude survey] scores are still at 21-year highs so we made it through the other side. I am happy that it is mostly in the rearview mirror and other folks will have to catch up.
Some federal officials want to crack down on distracted driving. How are automakers defending connectivity technology in the face of that?
Safety is always a core value for our brand and whenever we integrate new systems, we do it in a way that will have minimal impact on the driver. We look at that as one of our core competencies and we think we do that better than anyone else. Throwing something into the car because we can doesn't mean it makes sense, which is why we pay attention to where we mount the units to minimize eyes off the road
If it gets legislated it gets legislated and we will respond accordingly. For where we are right now, there is demand from consumers to be connected. We will develop and embrace voice recognition so that you can go from speech to text and text to speech. That would allow you to at least have hands on the wheel and eyes focused on the road. If the government decides to regulate the entire industry, we will respond accordingly.
What other systems do you use?
Our Collision Prevention Assist and our Distronic Plus [adaptive cruise control] feature. It is not a safety net, but when drivers become distracted -- and they become distracted all the time -- these assist systems will autonomously brake and help mitigate distracted driving.
How is Mercedes-Benz preparing to sell its new generation compact cars coming next year?
We showed the Concept Style Coupe in Los Angeles last month. This car is the concept version of a car that will eventually be coming to the marketplace as a four-door sporty coupe, perfect for the marketplace. If you had one car out of the five-car platform of this next generation that you want to lead, it's that car. We love the A class, but the hatchback market is still developing in the U.S. and there isn't a whole lot of volume. So again, we could not have orchestrated it any better -- the right car for our market is the debut of this platform.
Five different-sized cars off one platform?
There are size differences, yes. We call it the new generation of compact cars. I like to modify this whole notion of compact cars because when you say compact, most people have a different idea. This new platform is a couple of inches smaller than the C class. Even though we are calling it a compact car, it is not a Fiat 500 or a Mini or something like that.
It is in every way the entry point for our brand in the United States. It is very sporty and aggressive and it will open our brand to new buyers both from a product design concept as well as from a pricing standpoint. We will bring new folks to the brand. Opening up the brand is what this new generation is all about. B class and A class are out in Europe. Those will come a little bit later.
What is significant about the new generation GL SUV that you will launch this year? It has more competitors than when you introduced the GL as a 2007 model.
It is the best product on the market in that segment and the market leader in the last year of its life cycle. We are even asking the factory if we can have more production of the old model. In certain markets we are leaving volume on the table because we don't have enough.
I am not worrying about it being a more competitive market because we upped the ante. It is the S class of the SUVs. Competitors like the [Cadillac] Escalade are much larger. It is the right-sized big. There is always going to be a segment in the United States that needs seven-passenger SUVs.
We are improving fuel economy by 12 to 18 percent depending on the engine size. We have three engines. The net gain is more power and more fuel efficiency and safety and equipment, a better interior, an upgraded exterior -- it is a little bit bolder and a little bit bigger. It very nicely complements the design direction we took with the M class.
You can reach Jason Stein at email@example.com. -- Follow Jason on