Daimler AG is a multi-layered company that operates in the market with several subsidiaries and brands that are divided into corporate divisions.
Classical brand: Mercedes-Benz
The Mercedes-Benz brand came into being in 1926 as a result of the merger of Daimler-Motoren-Gesellschaft and Benz & Cie.
The first vehicles were sold by the Daimler-Motoren-Gesellschaft (DMG), which had been founded in 1890, but not under the name Mercedes. This brand name only came into being around the turn of the century, when the businessman Emil Jellinek, who starting dealing in Daimler vehicles in 1898, took part in the Nice Race Week in 1899 under the pseudonym Mercedes. This was based on the name of his daughter Mercédès Adrienne Manuela Ramona Jellinek. The driver’s name became known in connection with DMG, and in 1900 Jellinek signed an agreement on the development of a new, powerful engine model for the ‘Daimler-Mercedes’ – the first time the name Mercedes had been used as a product name.
Following the racing success of several of these ‘Mercedes’ vehicles in 1901, the name became so well known that DMG had it protected as a brand name in 1902. On 24 June 1909, the company applied for protection of the familiar Mercedes star as a registered design. And on 6 August 1909 Benz & Cie gained legal protection of the logo ‘Benz’ surrounded by a laurel wreath.
Looking back, the fact that both manufacturers registered their new brand logo in the summer of 1909 has a certain symmetry with the year 1886, when Gottlieb Daimler and Carl Benz, without being aware of each other, both invented an automobile powered by a high-speed combustion engine. 23 years on, the two – still competing – companies each set an example by creating new logos for their respective vehicles.
Finally, on 18 February 1925, the two brands registered a new joint logo – the Daimler Mercedes star inside the Benz laurel wreath. It was a highly symbolic act that foreshadowed the merger that would come into effect on 28 June 1926. Over the decades, the world-famous symbol has changed little and to this day can be found on all Mercedes-Benz vehicles. The ‘good star’ – which as part of a design development since mid-2010 has taken the form of a three-dimensional chrome star – identifies the world’s highest value automobile brand and has become a symbol of quality and safety on the roads. Mercedes-Benz has always stood for tradition and innovation, for the future of the automobile – in other words for ‘The best or nothing’, as the brand campaign launched in mid-2010 puts it.
Incidentally, the term ‘Daimler’ used in some parts of the world to refer to a
Mercedes-Benz vehicle is not correct: Gottlieb Daimler sold the rights to the name ‘Daimler’ for automobiles. That is why, since 1907, Daimlers have been manufactured in Coventry, UK, by the Daimler Motor Company. Since 1960, they have been identical to Jaguars. Currently, having acquired Jaguar in 2008, Tata Motors possesses the rights to the Daimler brand. In 2007, DaimlerChrysler AG acquired the rights to use the Daimler name from Ford, at the time the owner of the Jaguar and Daimler brands, so that the company could rename itself Daimler AG.
In the crisis year of 2009, the Mercedes-Benz brand sold just under 975,000 vehicles, some 150,000 fewer than in 2008. But not least, the launch of the E-Class (212-model series) in 2009 enabled the company to look forward, with justification, to better results in 2010: in the first six months of the year Mercedes-Benz sold 15 per cent more passenger cars (556,700) than during the corresponding period in 2009.
2010 also saw Mercedes-Benz post the best figures for June in the company’s history: global sales of 113,300 units represented an increase of 13 per cent. This meant that in June 2010, sales increased by a double figure percentage for the eighth time in succession. The main growth drivers are currently the E-Class and S-Class, and developments are particularly positive in the two major overseas markets – the USA and China.
The Mercedes-Benz brand is now responsible for about half the sales revenues of Daimler AG, and – logically enough – Dieter Zetsche is not only chairman of the Daimler Board of Management was also, as head of Mercedes-Benz Cars, responsible for the future of this traditional brand.
Leading-edge innovation: smart
Just how leading-edge the research carried out at Daimler AG is can be seen from the example of the company’s smallest car – the smart. The beginnings of this vehicle, which is designed to meet all the mobility requirements of the industrial nations, date back almost 40 years: in the early 1970s, Mercedes-Benz began work on a study of the future of the automobile in the year 2000. One of Mercedes-Benz’s greatest assets is its forward-looking research and development – or more precisely, the creative minds working in and for the company who use their extensive knowledge of future transport developments, an eye for trends and a good deal of imagination in their work.
The project to develop a special type of compact car was born of the oil crisis, which had even led to the introduction of driving bans in Eurosope. It was this experience and an assessment of future trends in traffic growth that made the engineers and designers in the Mercedes-Benz project team realise the need to develop a particularly low-consumption, environmentally friendly and compact vehicle for the urban centres of the future – but without making any concessions in terms of drive comfort and safety. In 1981, nine years later, the NAFA (short distance vehicle) study was presented. Based on the original idea from 1972, the vehicle represented a response to the problems of crowded streets, scarce parking places and long tailbacks. After going through countless design studies on paper and in modelling clay, a functioning 1:1 prototype was finally built. New features included the lightweight construction with a high degree of rigidity, the vehicle’s dimensions – 2.5 m long, 1.5 m wide and high – and the fact that it weighed in at a mere 550 kg. Ideas developed for the NAFA would be incorporated in the four-seater A-Class and the two-seater smart.
With the MCC (Mercedes City Car), as it was called during the development phase, the team solved one of the biggest challenges in Mercedes-Benz vehicle development: how to design a micro-compact electric vehicle a mere 2.5 m in length that had all the virtues and qualities of a genuine Mercedes-Benz, including passenger protection and a full range of innovations. The basic problem of how to get the City Car to comply with the high Mercedes-Benz crash safety standards was solved with a unique safety construction – later patented – developed in conjunction with the Sindelfingen safety specialist Karl-Heinz Baumann.
The company smart was set up in 1994 under the title of Micro Compact Car AG in Biel, Switzerland, as a joint subsidiary of Daimler-Benz, SMH SA (Société Suisse de Microélectronique et d’Horlogerie) and Swiss entrepreneurs Nicolas G. Hayek – inventor of the Swatch watch. During the development of the smart fortwo, which at the time was still called the ‘City Coupé’, Hayek left the project and on 1 November sold his share to Daimler-Benz. In September 2002, Micro Compact Car Smart GmbH was renamed smart GmbH. The administrative headquarters of smart were in Böblingen, and production was in Hambach, France, near the border with the Saarland, and for a while in Born in the Netherlands. On 1 October 2006 the workforce was integrated into the Stuttgart company, and smart GmbH was disbanded on 31 December 2006.
The two-seater became increasingly popular, and by 2008, a mere 10 years later, the one million threshhold for annual production was reached. During the course of 2009 the smart fortwo was also launched in China, Brazil, Denmark, and Serbia, bringing to 41 the number of countries all over the world in which it is sold. In September 2008, the second-generation smart fortwo electric drive was introduced, and since late 2009, a small series of the electric car has been equipped with an innovative lithium-ion battery.
Automobile luxury has a name: Maybach
The product strategy developed in Stuttgart aimed not only to satisfy the new austerity but also the need for luxury: at the 1997 Tokyo Motor Show Mercedes-Benz presented its study for a chauffeurs-driven Maybach limousine that offered all the luxury imaginable in a mobile environment – right down to a reclining seat and state-of-the-art in-car entertainment and communication system for the rear passengers. The vehicle was a tribute to Wilhelm Maybach, the technical wizard and partner of Gottlieb Daimler in the early days of the automobile and his no less talented son Karl Maybach, who built luxury saloons with a reputation for exquisiteness in the 1920s and 1930s. From 2002 onwards, the first saloons were delivered to customers from the factory in Sindelfingen. Instead of the well-known star they bore a double M. on the radiator: Mercedes-Benz had decided to revive the brand as a separate entity.
At the end of 2007, 10 years after the Maybach had first been presented in public, the landaulet version was presented as a study. The reaction was so positive that from early 2008 onwards it was built exclusively to order. The first vehicle was delivered to its new owner in November 2008.
From engine tuner to partner: Mercedes-AMG
In 1967, former Daimler-Benz employees Hans-Werner Aufrecht and Erhard Melcher set up a tuning business for Mercedes-Benz vehicles in Burgstall near Stuttgart. They called it AMG – A standing for Aufrecht, M for Melcher, and G for Großaspach, Aufrecht’s birthplace. From the very outset they concentrated on tuning Mercedes-Benz models. In October 1990, Daimler-Benz and AMG signed a contract of cooperation for the development, production, marketing and servicing of cars and car components. And in 1993, the first jointly developed AMG high-performance car was presented – the Mercedes-Benz C 36 AMG.
In 1999, AMG Motorenbau und Entwicklungsgesellschaft mbH became Mercedes-AMG GmbH, with Daimler holding a majority 51 per cent of the shares. And since 2005, Mercedes-AMG has been a wholly owned subsidiary of the Stuttgart company. For the C-Class and above, AMGs represent the top models in the Mercedes-Benz portfolio and can be ordered directly from Mercedes-Benz dealers.
The AMG concept no longer just involves engine tuning and minor modification of the bodywork – comprehensive alterations to the entire vehicle are now undertaken. ‘AMG — throughout the world, these three letters embody cutting-edge technology, dynamism and exclusivity. The experience of driving an AMG cannot be compared to anything else. After four successful decades, the brand now more than ever symbolizes a unique driving experience,’ said Volker Mornhinweg, head of Mercedes-AMG GmbH on the occasion of the 40th anniversary of the Daimler subsidiary in 2007.
The high-performance AMG brand celebrated the best year of its history in 2008, with unit sales rising by 19 per cent to 24,200 vehicles. ‘Despite an extremely challenging environment, AMG grew in nearly all of its markets, thereby further consolidating its leading position among high-performance automobile brands,’ stated the Annual Report of Daimler AG in 2008, ‘China and Brazil are among the most important growth markets for AMG. The brand was also able to buck the trend in its German home market by selling more cars in 2008, whereby the new C 63 AMG and the completely revised SL 63 AMG made a major contribution to this success.’
Heavy-duty vehicles: Daimler trucks
On 1 October 1896, an entry in the records of Daimler-Motoren-Gesellschaft (DMG) in Cannstatt reads as follows: ‘Motor truck order no. 81, vehicle no. 42, 4-hp 2-cylinder engine, overall weight 1,200 kg for 1,500 kg payload, Factura British Motor Syndicate Ltd. London.’ This laconic entry represented a historic moment: ten years after the birth of the motor car, Gottlieb Daimler had built the world’s first truck.
In 1896, Benz and Daimler were once again working on similar ideas. In the year of Daimler’s first truck Benz also presented a ‘combination delivery car’ – the precursor of today’s delivery van. The payload of the four-wheeled vehicle was 300 kg including the driver. At the end of 1897, Daimler got back with his own version of a light truck. The ‘Daimler Business Car’ would today also be classified as a van. And in 1900, Benz produced an entire family of what at the time would have been regarded as heavy trucks, the heaviest model having a 5-tonne payload.
Today, the products manufactured by Daimler Trucks range from light, medium and heavy trucks for long-distance freight, local delivery operations and construction site use to special vehicles for local authority operations. The brand names are
Mercedes-Benz, Freightliner, Western Star, and Mitsubishi Fuso. Daimler Diesel and the North American school buses from ‘Thomas Built Buses’ also belong to Daimler Trucks, whereas Mercedes-Benz, Setra and Orion buses form a separate segment and are listed in the financial report under ‘Vans, Buses, Other’. With revenues in 2008 of almost 28.6 billion Euros and a workforce of some 80,000, this division represents a major company within the company. In 2008, Daimler Trucks sold 472,074 vehicles and retained its position as the world’s biggest manufacturer in the heavy and medium weight truck segment.
One of the major factors in the increase in overall sales for Daimler Trucks in 2008 was the company’s performance in Brazil, Indonesia, and the Near/Middle East. This contrasts with declining sales in the USA, Canada, and Japan because of the extremely difficult market situation in the wake of the financial crisis. 2009 proved an extremely difficult year for Daimler Trucks because of the situation in the global economy: revenues and profits declined.
However, 2010 started promisingly: during the first quarter, Daimler Trucks sold 70,600 vehicles – a good 5,000 more than in the first quarter of 2009. A strong performance in Latin America and Southeast Asia in particular compensated for weak sales in Germany, the Near/Middle East, and Japan. EBIT was also positive at the start of 2010.
Go west: trucks in America
Daimler-Benz had been delivering trucks to North America since 1956, but only sporadically and in small quantities. It was not until 1969 that exports began to increase and in 1971 as many as 532 medium-duty trucks were sent cross the Atlantic. However this all ended in 1973, when devaluation of the US dollar against the deutschmark meant that every truck sold would make a loss. Despite the fact that the Mercedes-Benz plant in Brazil stepped into the breach, this could not offer a permanent solution to the problem. In January 1979, a plant was therefore built in Hampton, Virginia/USA, with a potential annual output of 6,000 trucks weighing between 9 and 15 tonnes.
But big enough for Eurosope was not necessarily big enough for America: the market for vehicles in the 16-tonne and above category for long-distance freight transportation was bigger than the market for medium-sized trucks and offered greater potential for the Stuttgart company. But heavy trucks from Daimler-Benz were not comparable with American models. Their outward appearance did not suit American taste, and in addition customers wanted to be able to choose for themselves what engine, what transmission and what axles their vehicle would have. This meant that American truck builders usually installed components manufactured elsewhere and only a few parts such as the frame came from their own production. For a company like Daimler-Benz, whose reputation was partly built on the fact that the purchaser could rely on the quality of every single unit and component in his vehicle, these were insuperable obstacles. There were two further drawbacks: one of the selling points, especially for heavy trucks, was the existence of as dense as possible a service network; and the approval regulations were different in the USA. In other words, entry into the American market was only possible by purchasing an established American manufacturer. In 1977, Daimler-Benz started by acquiring Euclid, a manufacturer of heavy trucks especially for ore and coal mining as well as for large-scale construction sites ad quarries. But the company sold it again in 1984 as it was making a loss.
Finally Daimler-Benz found its dream partner in the heavy truck category. In 1981, it acquired truck builder Freightliner, which had a similar reputation in the USA as Mercedes-Benz brand trucks in Eurosope and was especially strong in the long-distance segment. The company’s headquarters are in Portland, Oregon, with further production facilities elsewhere in the USA and in Mexico. Today, Freightliner is North America’s biggest heavy truck manufacturer.
In the year 2000, Western Star was added. Since 1968, this had been a model name used by the American truck – and formerly car – manufacturer White Motor Company. When the company went bankrupt in 1980 and was taken over by Volvo, Canadian entrepreneurs acquired the subsidiary, which then operated as an independent manufacturer under the name of Western Star Trucks Inc. After a further sale, in 1992, to Australian Terrence Peabody, the company was broken up in 2000 and Western Star Trucks was taken over by Daimler. Since 2002, Western Star vehicles have also been produced in Portland. Daimler Trucks positioned the Western Star Brand as a premium manufacturer, covering the heavy truck segment both for long-distance freight and also for the construction sector.
Between 1997 and 2009, the American truck brand Sterling also belonged to Daimler Trucks. In October, Daimler Trucks North America decided on a comprehensive plan for optimizing and re-orienting its operational business. Amongst other things, the plan included termination of the Sterling production program in March 2009. The decision was made ‘in order to concentrate our development and distribution resources on the Freightliner and Western Star brands,” stated the Annual Report in 2008. ‘That will allow us to create more innovations to promote safety, environmental friendliness and customer utility.’ From 2011 on, this consolidation measure is expected to improve the annual results by US$900 million.
In addition to this, Daimler Trucks North America also includes Thomas Built Buses in its portfolio. With these school buses, Daimler – as before in the German truck market – was putting its faith in a classic vehicle, and one that perfectly complemented the Freightliner chassis. The roots of the school bus manufacturer go back to the year 1916 in High Point, North Carolina/USA, when engineer Perley A. Thomas lost his job and was commissioned by the Southern Public Utilities Company to service various vehicles. In 1918, he set up Perley A. Thomas Car Works, Inc., and over the years this developed from a repair shop into a leading manufacturer of bodies for buses as well as commercial bus bodies. In October 1998, Daimler acquired Thomas Built Buses (TBB), which by then was producing almost 12,000 school buses per year and had a market share of 33 per cent. Sales revenues were US$350 million. The complete range of TBB bodies in the school bus and commercial bus segments perfectly complements the Freightliner FS-65 school bus chassis. The headquarters of Thomas Built Buses remain in High Point, with the main production facility, along with an assembly plant and spare parts warehouse also located in North Carolina. The other two TBB plants are in Woodstock (Ontario/Canada) and Monterrey (Nuevo León/Mexico).
Asia is a market with considerable potential – and high growth rates require strong support systems. In 2001, DaimlerChrysler took over the ailing Japanese manufacturer Mitsubishi, and in 2005 sold its share again. However Daimler AG retained the commercial vehicle subsidiary Mitsubishi Fuso – hived off from the parent company Mitsubishi Motors Corporation in 2003 – and now owns 85 per cent of the shares. In the wake of the Asian crisis at the end of the 1990s, the Japanese market had been shrinking, but the location provided a good base from which the Eurosopean company could operate in the Asia region. With appropriate restructuring measures, Fuso was able to increase its export share from 52 per cent in the year 2003 to 78 per cent in 2008. The German importer of Mitsubishi Fuso Brand commercial vehicles is Mitsubishi Motors Deutschland GmbH. In Germany only the Canter model series has been marketed since 1981. Mitsubishi Fuso Truck and Bus Corporation (MFTBC), based in the Japanese city of Kawasaki, sold a total of 197,700 light, medium and heavy trucks and buses in 2008.
Detroit Diesel Corporation
Founded in 1938 as the diesel division of General Motors, Detroit Diesel Corporation is a US manufacturer of diesel engines based in Detroit, Michigan. In those days Detroit Diesel was divided into two divisions: Off-Highway and On-Highway. The Off-Highway division bore the name MTU Detroit Diesel and has belonged to Tognum AG since 2006. The On-Highway division belongs to Daimler AG. In 1988, Penske Corporation acquired a share of Detroit Diesel and hived it off from the GM Group as Detroit Diesel Corporation (DDC). In 2000, Daimler acquired DDC and merged it with MTU Friedrichshafen to form a company called MTU Detroit Diesel. Today, the Daimler subsidiary Detroit Diesel is responsible for the design, manufacture, sales and servicing of medium and heavy diesel engines as well as alternative drive systems for the commercial vehicle industry. It has 800 authorised distributors.
The van division operates as a separate business unit – and can look back on a varied history. In 1977, Daimler-Benz launched a small van on the market which it named ‘TN’ (‘Transporter neu’). Weighing in at between 2.5 and 3.5 tonnes – and soon also with a 4.6 tonne version – this new, extremely versatile model series was intended to offer the levels of driving comfort and ease of handling associated with a passenger car. It was available as a panel van, minibus or platform truck. After 18 years of production, the TN was replaced in 1995 by a completely new design – the Sprinter –, a second generation of which has been available since 2006. In the USA and Canada the Sprinter is marketed under the brand names Dodge and Freightliner for legal reasons.
Today, the Mercedes-Benz van segment, which can be found in the annual report under ‘Vans, Buses, Others’, also includes the Vario, Viano and Vito. The versatility of these vehicles meant that in 2008 Mercedes-Benz Vans was able to virtually maintain the record sales levels achieved the previous year despite the difficult market conditions in the wake of the financial crisis. Global sales amounted to 287,200 vehicles – the second highest volume of sales of this vehicle type in the company’s history. High demand in the early months of 2008 meant that the plants in Düsseldorf, Ludwigsfelde and Vitoria/Spain were operating at the limits of their capacity.
The global financial and economic crisis in 2009 also impacted on sales, revenues and profits for Mercedes-Benz Vans. Sales of 165,600 units of the Sprinter, Vario, Viano und Vito models were well below the very strong performance of the previous year (287,200 units). In the key western European markets of the UK, France, Italy, Spain, and the Netherlands the crisis resulted in an average drop of 50 per cent in sales compared with 2008. On the other hand in Germany, the most important market for Mercedes-Benz Vans, the company benefited from the ongoing market success of the Sprinter, which continued to set new standards in terms of technology, safety, and economy, as well as performance. The decline in sales in 2009 was much more moderate, at 21 per cent. The only positive aspect of the crisis was that Mercedes-Benz vans were able to increase their market share.
At the start of 2010, there was a distinct improvement in the situation. Revenues for Mercedes-Benz Vans during the first quarter were up 31 per cent and sales increased by 62 per cent compared with the corresponding period in the previous year.
Passenger transportation in style: the bus
Since 1894, Benz had offered a landau version of his motorcar, with room for a total of eight people. The vehicle either had a removable hood or a glazed upper part with a solid roof. It was used mainly by hotels to bring guests to and from the train station. The first regular motorised passenger service was set up by Netphen and Siegen in order to link their two towns, and Benz was requested to build two motorised buses, which he delivered in March 1895. The buses took one hour 20 minutes to cover the 15 km route between Siegen, Netphen and Deuz, with its five stops and 80 m height difference. In 1898, Gottlieb Daimler also started to build buses.
In the years that followed, large numbers of bus services were set up at home and abroad. The biggest breakthrough in Germany happens when the Württemberg and Bavarian postal services ordered a number of automobiles for carrying packages and (shortly afterwards) also passengers. Daimler-Motoren-Gesellschaft delivered some 350 buses up to the start of the First World War, mainly to the Royal Bavarian Postal Administration, which bought a total of 250 vehicles. Daimler dominated the market with a share of 43 per cent, followed by Benz with 18 per cent and Büssing with 12 per cent. Daimler-Benz subsequently pioneered the use of diesel engines in buses.
From 1935 onwards, when the first autobahns (motorways) started to be built, extravagant futuristic plans were drawn up for overland coaches of hitherto undreamed of dimensions. However the outbreak of the Second World War quickly destroyed these ambitious dreams. Nevertheless, as early as March 1948, Daimler-Benz was able to introduce the new O 4500 omnibus – a vehicle with bodywork that no longer bore the mark of an age of wartime austerity. Between 1949 and 1954, the O 3500 dominated the market in its class. The O 6600, which appeared in 1951, was the first
Mercedes-Benz bus with forward control and a rear engine, and a precursor of the highly successful O 321 H. The latter was launched in 1954 and by the end of its 16 year career had sold almost 30,000 – more than any other bus in history.
The history of modern bus manufacturer in Germany and Eurosope begins with the launch of the first Setra Type S 8 in April 1951 at the International Motor Show, which took place that year on the premises of Kässbohrer’s general representative Kahl in Frankfurt am Main. The Setra enabled the former Karl Kässbohrer Fahrzeugwerke to grow into a company of international importance whose buses quickly became a hit worldwide. The company went on to develop subsidiaries in Europe and the USA, together with licensed partners across the globe, including China.
In 1995, 100 years after the invention of the omnibus by Carl Benz, Daimler-Benz AG took over the Setra Brand, hived off Mercedes-Benz Omnibusse and merged both brands into a new subsidiary called EvoBus GmbH. Both brands, with their long traditions, were able to contribute their particular strengths, and the new concept was a huge success, with EvoBus becoming profitable within a relatively short time. The vehicle shells for both brands are put together in the Mannheim plant and then transferred by rail directly to a new facility built in the early 1990s in Neu-Ulm, where they are assembled and painted.
In 2000, Daimler made a strategic acquisition of a manufacturer of environmentally friendly urban buses in North America when it took over Ontario Bus and Truck Inc., which had been founded in 1975 in Mississauga, Ontario/Canada, and renamed Ontario Bus Industries two years later. For decades, more than 230 towns and cities in the United States have relied on Orion brand buses. The company’s product portfolio includes hybrid city transit buses. Orion is a world leader in this segment, and its environmentally friendly buses are used in major cities such as New York City, Ontario and San Francisco.
By 2009, the product range supplied by Daimler Buses, the world’s leading manufacturer of buses over 8 tonnes, with its Mercedes-Benz, Setra and Orion brands, covered city and intercity buses, coaches and chassis. The most important of the 15 production sites are in Germany, Turkey, Latin America, France, Spain, and the NAFTA region (North American Free Trade Agreement). In 2008, 48 per cent of the division’s revenue was generated in Western Eurosope, 15 per cent in the NAFTA markets and 19 per cent in Latin America (excluding Mexico).
A special kind of sales model: authorised dealership
Sales of Mercedes and Benz automobiles at the end of the 19th and beginning of the 20th century were largely in the hands of independently operating representatives or partners. One particular example was the Austrian businessman Emil Jellinek, who was resident at the time in Nice. Having sold a large number of Mercedes cars to well-heeled customers in the early days, he became increasingly important for DMG and ultimately purchased and sold on most of the company’s vehicle production. Jellinek also had the right to sell the vehicles at home and abroad at prices and conditions that he set himself. But DMG eventually decided to take action over his excessive self-confidence and started to consider how it could exert a more direct influence on sales.
The German economy was also going through a crisis in 1906 and 1907, and sales of luxury goods, including automobiles, were declining. It was important for Daimler-Motoren-Gesellschaft to have complete freedom to take action and it therefore made preparations to terminate existing agreements – especially with Emil Jellinek – and pave the way for developing its own sales organisation. At roughly the same time, similar considerations were leading the managers of Benz & Cie. in Mannheim to the same conclusion: both companies now began to draw up plans for developing their own dealerships.
Such an approach offered a number of advantages: firstly it was no longer the salesman who determined the prices – it was now the manufacturer who could decide how, where and at what price his vehicles would be marketed. Consistency was the name of the game, and list prices were established. Secondly, the new system meant manufacturers had direct contact with the wishes and needs of the customers via their sales outlets and were better able to design their products to meet the tastes of the public.
In addition, they were also able to guarantee the quality of service and maintenance – a crucial sales factor for a brand manufacturer of an expensive item like an automobile. And last but not least, manufacturers saved money by cutting out the intermediary. By establishing their own sales operations, companies were, incidentally, ahead of their times: all the points just mentioned are still a matter for discussion between manufacturers and traders in other sectors of industry.
For foreign sales, Benz & Cie. as well as DMG still relied on representatives or business partners, but after the Second World War this changed too: from the currency reform of 1948 to around 1960, sales of Mercedes-Benz cars were almost exclusively in the hands of independent wholesalers and importers who invested their own capital in the process. This enabled Daimler-Benz to use its own resources to build up and expand its domestic plants.
The 1960s were used for consolidation and careful development of the company’s own sales structures in important markets. In 1965, for example, a sales subsidiary was set up in the USA – Daimler-Benz had had little joy with its previous sales partners Studebaker and Packard hat – and this was followed by Canada and France in 1969. In the 1970s, sales operations in Western Eurosope were reorganised and later on in Japan as well.
By the end of 2008, Daimler AG was operating some 7,300 sales outlets all over the world. The 2008 Annual Report recorded sales expenditure of 9.2 billion Euros, which represented 9.6 per cent of sales revenues.
It is perhaps not surprising that Daimler AG is particularly well represented in Germany. By the end of 2008, the Mercedes-Benz sales organisation in Berlin – Mercedes-Benz Vertriebsorganisation Deutschland, or MBVD – was responsible for sales and service in the German market for the Mercedes-Benz, Maybach, smart and Mitsubishi Fuso brands, as well as operating used truck centres (Transporter-Gebrauchtwagen-Centers – TGC), AMG Performance Centers and TruckStore Centers, which remarket used trucks.
With some 1,200 sales and service centres, customers are offered a comprehensive aftermarket network throughout Germany. A workforce of some 17,250 in
Mercedes-Benz dealerships, 39,000 licensed Mercedes-Benz partners and 1,650 employees in smart centres and subsidiaries ensures their efficient operation.
New divisions: Financial Services
In the latter half of the 20th century, many vehicle manufacturers discovered the marketing potential offered by the provision of financing options. In 1967, Daimler-Benz AG also launched its first leasing activities, in 1979 the company set up Mercedes Leasing GmbH, and in 1987 Mercedes-Benz Finanz GmbH was founded. It was integrated into Daimler-Benz InterServices AG – now Daimler Financial Services AG – in 1990.
In 1992, the Group also set up Mercedes-Benz CharterWay GmbH and became involved in the field of commercial vehicle fleet management. In 1997, it added cross-brand passenger car fleet management as well. In 2000, the value of contracts signed by its subsidiaries for leasing and finance reached the 10 billion Euros threshold for the first time. In 2002, Mercedes-Benz Bank AG also became involved in deposit banking, offering a range of products including savings accounts, savings plans, fixed interest deposits, investment funds, certificates, and credit cards.
Today, Daimler Financial Services is one of the world’s leading captive financial services providers and the biggest global supplier of financial services for commercial vehicles. More than a third of corporate vehicles around the world are now financed or leased by Daimler Financial Services. With a broad range of services that includes financing, leasing, insurance, and fleet management, Daimler Financial Services handled a total contract volume worth 63.4 Euros in 2008 and employed a global workforce of some 7,100.
The sales partners for vehicle-related financial services are the dealerships for the various Daimler AG vehicle brands. In 2008, the value of leasing and financial services provided by the Mercedes-Benz Bank rose 6 per cent to 9 billion Euros and the balance sheet total was 18.8 billion Euros. The volume of deposits grew some 50 per cent to 6 billion Euros, and by the end of February 2009 had reached 10 billion Euros.
Ideas for the future
In 2007, Daimler AG set up its Business Innovation department with a view to finding and developing new, profitable fields of business. The idea was to identify unused potential within the company and also develop new ideas around the company’s core business.
One clever idea turned out to be the innovative mobility concept entitled ‘car2go’. This was the first project to come out of the new division and was swiftly implemented in practice.
It is a mixture between car rental and car sharing that involves a simple mobile phone call: a registered driver simply holds up a specially coded membership card to a card reader, gets into the car and drives off. He can drive for as long and as far as he wishes, and when he reaches his destination he simply parks the car and walks away from it.
At the end of October 2008, Daimler made a fleet of 50 smarts available for the local care-sharing operation in Ulm. This initial pilot project involved some 500 employees at the Ulm plant being given access to the blue and white cars, but shortly afterwards a further 150 vehicles were made available to all-comers.
Within a year the Ulm project had 18,000 customers, by the beginning of 2010 one in ten inhabitants of the city was a car2go customer, and one year after the project was first launched there were up to 1,000 fully automated rental operations taking place every day. Since November 2009, Austin/Texas has been the second city to test the car2go system, also with 200 smarts. iPhone® apps are now available that enable the location of the vehicles to be identified and provide the driver with vehicle status information such as the amount of fuel in the tank.
In 2010, car2go GmbH was officially registered as a company with its headquarters in Ulm – underlining the intention of Daimler AG to play a leading role in the field of urban mobility and permanently establish car2go as a new business model in the market.
Other steps taken by the Business Innovation department include the marketing of exceptional pre-owned vehicles as part of the Young Classics project, and the renting out of well-equipped, as-new Mercedes-Benz vehicles via its own subsidiaries or dealerships as part of the Mercedes-Benz Rent project.