DETROIT -- Mercedes-Benz Financial Services, which also finances Smart and Daimler AG's commercial-truck business in the U.S., is on track for double-digit percentage growth in leases and loans this year, said CEO Peter Zieringer. It also will roll out improvements to its digital platform in the fourth quarter as it moves toward a fully digital sales process from start to finish.
Zieringer, 47, spoke with Staff Reporter Jamie LaReau.
Q: How is 2015 going?
A: We had a good first half of the year. We grew our [loan and lease] acquisitions by around 10 per-cent and we would expect that growth rate to continue for the rest of the year. But it's not only about financials. We also have very important strategic goals that we want to achieve. One of them being high customer-dealer satisfaction. We just recently won all three categories of the J.D. Power 2015 U.S. Dealer Financing Satisfaction Study. That makes us very proud.
Where do you see need for improvement?
We have a set of financial goals, things like growth and profitability. We don't really talk about that on an individual country basis.
The piece we're talking about is Mercedes-Benz. Last year we did about 300,000 contracts in new acquisitions. That's leasing and financing in new and used. So we're talking about 30,000 contracts [or 10 percent] growth [in the first half].
Is that growth balanced between leasing and sales?
We usually do around 45 to 50 percent in lease penetration and that's the range we're in this year. The remainder, some 15 to 20 percent, is coming from financing.
M-B Financial offers leases on certified pre-owned vehicles. What are the challenges there?
If you get CPOs that are near to new cars, so not too old, I don't see significant challenges applying leasing to CPOs.
You recently visited some businesses in Silicon Valley. Why?
One of the main strategies we put a lot of money into is digitalization. That is why we have had a closer look at what's going on in Silicon Valley. A few things we have copied from there are how they go about implementing idea generation and implementations of ideas.
What we have tested already successfully is getting everybody who'll eventually be involved in the process around the table from day one. Instead of developing it in sequences, you do it in parallel. You gain a lot of time and you have a product to look at much faster than you would have using the traditional methodology. Then you have something to discuss and change immediately.
We have tried it out with two projects that we run internally. We plan to roll it out on a larger scale.
Will this be rolled out to dealers or in-house?
It starts with financial services here and in Fort Worth. We're identifying the additional projects that will work well with this methodology.
How will this benefit dealers?
We hope to deliver our new product a lot faster than currently.
In 2011 we made the critical decision to upgrade our core portfolio systems in the U.S. and Canada with a modern and flexible solution.
Phase one of the program for our commercial-vehicle portfolio launched in 2014. The second phase for our passenger-car portfolio will launch in 2016.
We were also the first captive to offer mobile account management when we launched the myMBFS iPhone app in 2009. With consumer adoption continuing to grow, we are expanding the platform again. It's called myMBFS 3.0. It is scheduled to launch in the fourth quarter. It enhances our existing Apple iOS platform and expands to the Android platform.
Which of your branded F&I products are most successful?
Apart from the leasing and the financing, the most successful in terms of volume would be the wheel-and-tire. The lease-end protection -- these are chargeable items that go beyond regular wear and tear.
Of course we have the service contracts that we sell and administer. Pre-maintenance and extended warranty would be the two most successful ones.
Where are there opportunities for growth in these products?
It's making sure for our dealers and customers that doing business with us is as easy as possible. We have put a lot of effort into digitalizing the front end, the point-of-sale. Over the last 12 months, we've rolled out eDiscounting as part of our eContracting strategies. It's part of a funding package that comes from the dealership to us, including the payout process back to the dealer. That's digitalized and a very convenient experience for both the dealer and for us.
What else are you working on with dealers?
The vision is to have the full process from A to Z be digital. That's the moment a customer is at home browsing on the Internet and fills out a credit application with Mercedes-Benz Financial to delivery and beyond.
Some pieces are in place, some pieces are missing. We want to extend that to the whole value chain where it can be done including electronic signatures and everything that comes with it, knowing very well that not all states allow that so we'll still need paper and wet ink. But we want to have the infrastructure in place to do that.
How close are you to this becoming a reality?
I'd say halfway through. It's difficult to say because some pieces are beyond our control, like the legal and regulations that prevent us from doing it.
What specifically can you do to help dealers sell more cars?
When we launched the CLA some time ago, we were specifically going after a younger customer than usual.
We put thought into how can we make it easy for a younger customer. So instead of relying heavily on credit history that a younger person just out of college and in a first job may not have, what other criteria can we use to run a smooth process on a credit application.
We came up with a separate stream for [credit applications from] CLA customers.
We get together with the manufacturer very early to discuss who's the target customer [and] what are the special needs we need to consider to get a specific model moving in the market.