What have been the main achievements for Daimler Financial Services Mexico since your inception 20 years ago?
Our 20 years in Mexico have been a success story, as well as an illustration of Daimler Financial Services' worldwide growth. Daimler Financial Services has grown globally to a portfolio of over €80 billion. Mexico is a more recent addition to the company, but we are a success story nonetheless. Last year, we closed the books with over Ps20 billion in our portfolio. We finance four out of every 10 vehicles sold, which is 40% of the vehicles sold worldwide, and the same goes for Mexico. Overall we have shown tremendous portfolio growth and increased our penetration, on the business side. Daimler Financial Services is also involved in financing public transportation. Our company is one of the pioneers in transforming small, informal transport into real enterprises. We are working hand-in-hand with public authorities to improve the quality of life and the air quality through modern technology in transportation choices. We have also established ourselves as one of the top-20 employers in Mexico.
Which factors contributed to the current size of your portfolio?
Daimler Financial Services is a customer-driven company, and we have substantial evidence to show that we have grown with our customers and users. We have helped both the dealers and distributors grow in the market, and we also deal with many second-generation companies, which has created lasting business relationships.
What are your company's services in the truck and bus segment?
Daimler Financial Services had a spectacular year in 2014 in the bus segment, although last year the truck segment had its share of problems stemming from the importation of used vehicles from the US. Nevertheless, our services in that segment were still solidly delivered, despite the unusual amount of importation from the US.
The millennials are now responsible for 40% of new car sales in Mexico. How are you approaching this demographic?
We are taking a different approach with millennials than we had with Generation X, which were focused on brick and mortar stores and traditional paper-based services. The millennials are different because when they come to a dealership, they have already made their purchasing decision by researching online. Part of our transformation involves targeting millennial consumers with online services. For example they can now check their account balance online, which is representative of the type of service that millennials regard as non-negotiable. We are trying to find channels and ways to seek out the millennials even before they reach the point of sale.
What factors have led to an increase in financing in Mexico through companies like Daimler Financial Services?
It goes without saying that everyone likes convenience. When you buy a vehicle the ideal scenario is going to the dealerships and getting everything in one package including the vehicle, financing, insurance, and services. That is a development that we are seeing already in the US and Europe, and it is now coming to Mexico too. By offering the complete package, we are able to meet the demands of new buyers. The overall leverage of the customers is much lower in Mexico than it is in the US. There is a lot of room for growth.
What is the importance of Mexico for the company?
Mexico is one of the few markets where you can still have double-digit growth, as it is not an established industrial country. The demographics of Mexico are very important and also add to national growth, whereas in countries even like China, stagnation of the population is affecting their economy. Right now Mexico is in somewhat of a sweet spot between growth, stability, and very positive demographics.
What opportunities do you identify for Daimler Financial Services in Mexico?
One aspect is definitely the mass affluent segment. We have invested heavily in small luxury vehicles like the A Class or the B Class. The segment provides vehicles and financial packages for a younger demographic that has money and a more stable financial situation. We are also involved in the bus segment, which involves public transportation and the transportation options for employees. We have two other segments including the truck and van segment. This equals a total of four segments, and the truck segment has been relatively inactive, meaning there will be demand in the coming years for upgrading fleets. We sell Freightliner here, and we are in a good position because Mexico has become highly professional with Total Cost of Ownership (TCO). Companies are looking beyond the vehicle price to the long-term mileage costs. Freightliner has come out with a new diesel engine that has fantastic fuel economy. TCO, combined with our financing, allows companies to cut their costs. The fourth segment is the van business, and we all know that the internet economy has increased parcel deliveries. This has provided an opportunity for us to participate in the growth of this delivery van fleet. The government is really doing the right thing by investing in infrastructure. I am impressed with the new highways being built which are up to world-class standards. These have really improved the logistics infrastructure.
What is your outlook for the Mexican economy over the coming five years to 2020?
Last year we were expecting better performance for 2015, and predicted that 2016 would be even better. We know that the next two years will be good, but we do see some clouds on the horizon. One issue is the social situation in Mexico, and we acknowledge that need to make a collective effort to talk about the problems facing our society. We need to look at the causes of the social unrest. Overall, this is not a major threat, but it is casting a shadow over the highly positive outlook we have for the country.
© The Business Year - April 2015