Q: How are you managing inventory amid the supply chain disruptions of the microchip shortage?
A: You have to be agile, decisive and act with speed. We are a global manufacturer and have a web of suppliers and production sites. We have prioritized production of vehicles that have a high demand in markets. [The U.S.-made] GLE and GLS are top-notch products. So that leads to a certain priority for the Tuscaloosa factory. But at the same time, there's also a high priority on our electric vehicles.
We are not out of the woods when it comes to semiconductors. The demand is still high. The market is overheated. Fingers crossed that we will continue doing the best in the current situation.
How are dealers handling the supply crisis?
I must give high credit to our dealers, who have been very flexible in selling the vehicles that we could supply to them. It's not always the products that they would wish or the amount of product they would wish. But kudos to them for managing very, very well the sales out of the given supply.
What's your outlook for customer demand through 2021?
We have high demand, we have high showroom traffic of customers. The positive market development will continue to the end of 2021. We see the business not only on new-car sales, but used-car sales, and more importantly, our fixed operations are also on the rise.
We cannot satisfy the demand that we have today. Now we'll try to find a way to satisfy this demand, which in our case, is accelerated by the launch of new models.
Which models are you looking forward to this year?
2021 is the "Year of the S" for us. The S-Class will hit the market here in early summer, the electric EQS at the end of the summer. We have the SL coming. So these are our big shots.
At the beginning of next year, the C-Class is coming.
We have a very attractive and young product portfolio. We are limited by supply chain challenges, but other than that we are in a very good state in our products.
How will the Mercedes product portfolio evolve in the U.S. over the next few years?
On one hand, we try to determine what's changing with customer trends. At the same time, we have a major shift toward sustainable mobility.
There will be an expansion of the EV portfolio and rationalization of our internal combustion engine portfolio to take complexity away and make space for EVs.
When it comes to our ICE portfolio, we'll try to address the U.S. market with products that are most demanded. The focus remains on the model lines, but maybe we will limit some engine offers, or we'll simplify [packages].
Why did Mercedes pivot with its EV strategy in the U.S. early — canceling the launch of the EQC compact crossover as the debut model?
When you launch a new brand, you have to have the right products. We cannot come to the market with half-cooked plans. Clearly, we were not ready to launch the EQ brand [during COVID]. We made the decision to delay the launch of the brand to prepare ourselves and the network with the right product. And also, once we launch, have volume and a cadence of [EV models].
Are your dealers enthusiastic that Mercedes-Benz is embracing EVs?
Mercedes is addressing the challenge of the times with top products — good in design, strong on the engineering side and the performance they have.
Dealers are asking for the option of an electric car in the product range because customers are asking, "What is coming from Mercedes on electric?" They see customers switching to electric cars of other brands. Our problem is not convincing the dealers — our problem is giving the dealers product to sell.
Will dealer margins change for electric vehicles?
I don't see any change in the margin. I see that the priorities for the dealer might change in the future, having to push one or the other technology. I see the necessity for dealers and for Mercedes-Benz as a brand to become faster, speedier in the market, and to use digital technologies for the benefit of the customers.
The margin is a performance driver, so it's related to some performance criteria, which will be adjusted to the electric product. But we're not after dealer profitability. We want to prepare the dealers to serve customers. We are looking at the dealers to make the right investment for the EQ brand in human capital, but also in the physical retail of these products.
How is Mercedes addressing the shift to digital retail?
We see a fundamental shift in consumer behavior, specifically in increased demand for personal mobility and a greater reliance on e-commerce during the shopping process. Therefore, we've moved to accelerate our digital transformation as an immediate priority. We recently established a new "Digital House" department that consolidates connected car services and digital marketing platforms to emphasize the role of digital in our customer journey. We need to think at the speed of digital and make it a core competence.