The CEO of Daimler AG can be credited for redefining the new roadmap for luxury in the Mercedes-Benz brand, sustainable innovation and technology as well as the electrified future for the German carmaker.
We often hear how the Covid crisis has set the perspectives right for many people. Necessities have taken centre stage and luxuries have retreated to the background. As we increasingly adapt to doing things from home, the flashy couture creations stay ensconced in cupboards and cars seem more like an unnecessary expense. In the world of automobiles, the key question is: how do you go about selling luxury high-end cars in this scenario?
Well, the CEO of Daimler, Olla Kallenius has a rather interesting perspective. “Fewer cars are not the solution. Better cars are. Yes, the continued growth of mobility means a corresponding growth in the use of resources. But we have to change that. Our approach is decoupling. Decoupling the Mercedes way, however, means that we’re decoupling volume growth from resource consumption. Our tools to achieve that are sustainable innovation and technology.”
Tackling the slowdown head-on
Often accused of going slow, in terms of tackling the myriad problems that bothered the company when he took charge in 2019 including costs involved with the airbags recall, compensation for the emission manipulation, plunging share prices, lower profits and then come 2020 with Covid, it’s been a tough year for the man at the top. But Kallenius, along with his Chief Financial Officer, Harald Wilhelm, were successful in pulling off, what many believed, to be an impossible feat, a faster-than-expected recovery.
As Wilhelm outlined, “We have successfully pushed forward our comprehensive efforts regarding cost control and cash management. With this momentum, we are on track to make our business more weatherproof.” The high free cash flow of around 5.1 billion euros in the third quarter of Covid-scarred 2020 reflects the continuous efforts in cost-cutting and cash-preservation measures as well as the positive operating performance across all divisions. Perhaps, this is what empowers them to give a confident full-year outlook along with a strong growth projection for the luxury segment.
What’s driving the recovery?
Though there has been some amount of recovery in the market, Kallenius realises a reboot in approach is necessary. His battle cry is, “Reduce, Reuse, Recycle — with the ultimate goal of fully closing the loop, from value chain to value cycle.”
His sharp financial training and keen sensitiveness to nature is clearly evident in the way he skilfully combines sustainability and cost saving initiatives.
The company is aggressively aiming to grow its share of electric vehicles and has targeted a carbon-neutral new passenger car fleet by 2039. By 2030, Daimler plants are set to reduce their total water consumption by a third per vehicle and reduce the energy they consume by more than 40 percent per vehicle. In the near-term, the company claims all plants in Europe will be carbon-neutral run-on renewable energy by 2022.
Kallenius’ deep connect with nature is understandable. Born in Sweden, a beautiful, sparsely populated country with abundant nature and wildlife, the Daimler CEO understands that many things need to change to preserve nature and also derive business sense in it. Especially, for a predominantly luxury car brand.
Charting the future for the Mercedes brand and the company, Kallenius brings out this beautiful symphony between environment and engineering when he says, “Our way is Sustainable Modern Luxury. Our tools are technology and innovation. The transformation of the automotive industry, the industry at large, and society as a whole — is something we look forward to. We’re quintessential tech optimists. The ‘Vision Advanced Vehicle Transformation’ is a symbol of that. And a reminder that the best is yet to come.”
This was first published in Autocar professional's 16th Anniversary issue on December 15, 2020.