Juergen Schrempp, CEO of DaimlerChrysler AG, is planning a four-seat Smart car in Europe for 2003 or 2004, which could come to the United States.
He was interviewed in Stuttgart Oct. 25 by Richard Johnson and Dorothee Ostle of Automotive News Europe. See Page 20 for more of Schrempp's views, part of the Talk from the Top series by Automotive News.
Are you happy with the sales performance and profitability of the A class?
I'm very happy. The A class is now profitable. We just celebrated 500,000 A classes. Who would have thought that when we were in the midst of the crisis? Only me and Juergen Hubbert were convinced that we got it right.
And we are obviously working very hard on the successor of the A class.
We will introduce a number of interesting features, making that car for that particular segment even more interesting.
So is the car profitable?
The A class is profitable. We are not yet profitable - but we're moving in the right direction - with the Smart.
The real breakthrough for the Smart will happen in 2003 or 2004, when we bring the four-seater Smart online. Then we'll have a whole range.
Initially I think one of the mistakes was that they originally wanted to have an exclusive dealer organization with one product, with a volume of 100,000 annually. That concept was changed: It's still separated, but it's now part of a powerful organization.
Will Smart be sold in the United States?
Not yet. First we have to establish a range of vehicles. The first consideration we would give to that would be possibly in three to four years.
Do you need more Mercedes-Benz capacity in Europe?
We are running everywhere to full capacity. We have extra shifts and things like that, but despite this good situation I would at this stage be very hesitant to add more capacity. We will add more capacity now with the four-seater Smart in Holland (at the NedCar plant), but on our traditional lines.
Do you see Mercedes-Benz brand entering in new segments - below the A class, above A class, below C class?
Not below A class. Anything that is above A class, if there's some niche open, we would do. But we cannot see any niches open at the moment.
What about the off-roader segment?
We are in the off-roader segment.
Sure, but aren't you very close to Jeep, and aren't you moving even closer to Jeep?
Jeep is positioned differently than, for example, the M class or the G-Wagen. This is the kind of thing we discuss in the automotive council and on the board: How do we position replacements when the replacements are due? Do we try to get them a bit further apart? Sometimes - not in this case, but sometimes - you might want to place two vehicles basically in the same segment - one at the low-cost end, with less technology. And you place in the same segment one, obviously, with a much higher price, with the latest technology.
Are there any short-term measures you can take to improve the DaimlerChrysler share price?
What comes to mind is a share buyback. We got permission under German law at the last shareholder meeting. We can do it and we might - at the right time.
The other thing is that we will extensively go out. We employed a lady from London (Elizabeth Wade) to run our investor relations.
I have so many prizes in my office for investor relations work. We get prizes for being open, for providing numbers, for fast response. But I have not received the prize for excitement, for fire, for marketing. So I told (Wade) that we have to go out - I have to go out - particularly in 2001.
I will spend at least 25 percent of my time in the investor community with analysts to convey and document our story.
My American colleagues do it, but nobody in Europe does it that way. I've talked to a number of my peers at American companies and I asked them, 'What are you doing in Wall Street? How much time do you spend? How do you approach that?' Those guys, two or three times a year, go on shows for a week or for two weeks. At least I want to try it.
If you're going to spend 25 percent next year, how much time do you spend talking to analysts now?
This year we had our typical sessions in New York when we saw analysts and we saw investors, and we have analysts conferences or analysts conference calls. That I have done.
I still believe one of the deficiencies we have presently is that we are not getting the full message across.
But I'm not so despondent about what has happened.
What amazed me was in 1999 our results in net income and in operating profit were the best in the world. Yet our stock in 1999 dropped by 30 percent. So it is not only immediate financial results, it is obviously perspective and we have a tremendous story to tell.c
How much time do you think you have to get that message across until your shareholders get unpleasant?
I have a good situation for a German chief executive in that I not only have the German supervisory board but I have a shareholder committee, where we talk business like an American board. They are very convinced that what we're doing is perfect, what we are doing is excellent, and I have no doubt that our stock will appreciate considerably over time - as long as what we're doing is the right thing. We must not try to manipulate the market in the short term.