What are the drivers behind Mercedes-Benz's growth figures, and what is your strategy to continue to break records every year?
Mercedes-Benz has been around for over 130 years, and we have always been the leader in innovation. It is always the matter of representing a brand that is interesting for the premium market from the perspective of innovation, safety, and services, which are all important to the consumer, and it is sexy from the point of view of design. It has also become more important for our employees and the public to not only see our products and services but also how we behave, what we give back to society, how we get involved in issues in Mexico specifically, and so on. The success of the brand first and foremost has to do with the product. Five years ago, we introduced the new A Class, a new generation compact car (NGCC), and people truly love its design, sportiness, dynamics, and performance. We have done our homework not only in the compact segment, but also have impressive growth in the SUV segment, with 50-60% growth in SUVs depending on the country. From a global perspective Mexico is one of the top five countries in terms of growth. In 2016, we had 36% growth and in 2017, a 22%. We are number one in the Premium market in Mexico.
What are the reasons behind your decision to construct a manufacturing facility in Aguascalientes?
There are two reasons for being in Mexico: to be part of NAFTA, which is important for the American, Canadian, and Mexican markets, and because Mexico today is number five from a manufacturing perspective worldwide and is one of the big players with excellent quality, great labor laws to be fast and flexible on decisions, a large pool of young people, and great support from the different regions and the Mexican government. Overall it is a great country to invest in; the local market is growing and is close to the NAFTA markets and it also has great trade agreements with the European community; therefore, it is an interesting place to invest in.
How do you foresee the NAFTA renegotiations impacting Mercedes-Benz in Mexico?
I expect there to be a discussion on the level of numbers and not on emotions. The main point is the US' large trade deficit and the issue is not Mexico but Asia—specifically China. At some point, it needs to look at the real issues. I do not expect major changes and we still have WTO even if NAFTA is cancelled or things end up differently. I am in fact largely unbothered because I hope people understand the business and we are positive overall. We will proceed with our project in Aguascalientes and with our strategy for the future.
What have been the results of Mercedes' innovation processes?
Our AMG cars, which are our high-performance cars, have 25% to 30% less fuel consumption compared to the previous model; traditional engines are being optimized. We recently introduced hybrid cars into the Mexican markets and will introduce more in 2018; therefore, this is the next step before fully electric cars arrive. Electric cars are the future and will arrive fairly quickly so innovation will be essential, not only for Mercedes-Benz but everyone. The entire automobile industry is changing and we do not want to become like Nokia or Kodak; we are currently successful because we are adapting. One positive thing is that we are earning profits and are investing in new technologies. Cars are evolving into multi-media products and we need all kinds of different people working for us: more millennials and digital experts, and perhaps less engineers looking into the engines, especially in the future when we are talking about electric cars. Many things are also changing for our dealer network and retail; retailers will be needed, though perhaps in a different way and this will be from the perspective of commercialization. Connected cars and shared electric cars will be the future. We also launched a company called CASE, a year ago that is working on all these areas: Connectivity Autonomous, Sharing and Electrification. We are talking about a different kind of product in the future and this is a real challenge globally that will affect Mexico and we need to be prepared. On the one hand, we need to be operationally excellent currently and be careful with our execution; however, on the other hand, my responsibility is to get my dealer network prepared for the next decade at least because the future is rapidly approaching.
What new ways of using cars will arise in the future?
The expectation will be that we need to offer things like a shared platform for families and friends. A house of four will want to own three or four cars and we need to offer a solution of how we manage these four cars, who uses what, and who pays for what. There will be different models in the future and people will perhaps want to own less and share more cars. A large part of the population will likely want to own their cars and the question is if today's millennial will behave in the same way. There are many other question marks, such as Mexico being behind with the infrastructure, streets, and quality of infrastructure. The infrastructure for electric cars can be implemented quickly; it is more about the streets and pavements and we need a certain quality of streets and signs, which seems to be the challenge.
What is your short-term outlook for 2018?
Looking at the past 15-20 years, the Mexican economy has become independent of politics, which is different from Argentina or Brazil, where there is a huge dip in GDP and car sales when there is an election. This does not happen in Mexico and should not be the case in 2018. For the automobile sector, specifically, I do not expect a dip. Mercedes-Benz targets interesting growth and we are still in an offensive mode to introduce many new products to the market. Our dealers are extremely positive and want to go ahead. We wake up every day working to sell more cars.