NEW YORK – Bullish about his brand’s prospects as well as those of the entire industry, Steve Cannon, CEO of Mercedes-Benz USA, predicts 2015 will see an “SUV feeding frenzy” that will help boost U.S. auto sales above the 17 million mark for the first time since 2007.
Although the remarks came on April 1 during the first press day of the 2015 New York International Auto Show, it was no April fool’s joke, Cannon says. That was the same day he added to his responsibilities by becoming head of Mercedes’ Canadian and Mexican operations, thus placing all of North America under a single leader.
Cannon also unveils an upgraded GLE midsize SUV which will replace the M-Class and be available as both a gasoline-fueled vehicle and a plug-in hybrid. Mercedes’ Smart division also premieres a new-generation micro-car at the show here.
While the Mercedes brand trails BMW in volume, Cannon announces March sales were up 7.6% year-on-year at 78,156 units. “We have a stated (long-term) goal to win in every segment,” he tells WardsAuto. “Short-term sales goals ignore the bigger picture, which is to lock in customers for life.” He maintains that’s a winning strategy for Mercedes.
It also can help deliver on Daimler Chairman Dieter Zetsche’s announced target for the automaker’s Mercedes brand to deliver a 10% return on sales revenues. “The only way he can deliver on that target is for MBUSA (the company’s biggest car market) to deliver it,” Cannon insists. But he admits MBUSA hasn’t delivered that kind of profitability yet.
MBUSA’s decision to relocate its headquarters from New Jersey to Atlanta will help deliver the 10% return, Cannon says, noting the immediate costs of building a new headquarters and moving will be paid back in a short period, although he declines to specify how long that will be.
The first occupants will be moved to Atlanta as early as June. He declines to specify how much money MBUSA ultimately will save on the move to Georgia, except it will be “significant.”
Cannon welcomes the opportunity to bring Canada and Mexico sales under a unified North American tent. About 30,000 Mercedes units are sold annually in Canada and Mexico sells one-third of that number. He notes the consolidation is occurring in midcycle of this year’s sales and marketing plan. He expects to tweak that plan as the year goes along but won’t introduce anything significantly different until planning for the next cycle is approved and adopted.
Cannon notes most sales in Canada are made in Vancouver, Toronto and Montreal. He believes Mercedes needs to offer more of Mercedes’ 4matic all-wheel-drive models north of the border, possibly offering a 4matic option for across the portfolio. “I see opportunities in aligning our businesses,” he says. “Now we’ve unified responsibilities and business in a more robust way.”
The consolidation also will allow Mercedes to move personnel back and forth over the borders. “That hasn't happened before,” he says.
The Mercedes chief says premium-segment sales overall are keeping pace with the mass market, gaining 8% to 9% over 2014. Mercedes was up 7% for the first quarter. “If the market continues strong there’s a possibility for us to achieve double-digit growth this year,”' Cannon says.