DaimlerChrysler wants to increase by 700% its income from financial services and "aftersale" products, says its chairman and CEO, Juergen E. Schrempp.
"By 2010, I visualize that the revenue stream of DC will be 50% hardware (manufactured vehicles) and 50% services from finance and insurance, aftersale audio equipment and repairs," says Mr. Schrempp in an interview with a German newspaper.
In 1999, non-hardware income generated only 7% of DCis revenues of $144 billion, flowing mainly from its 10-year-old subsidiary, Berlin-based debis financial services. debis revenues in 1999 increased to $12.4 billion, with pretax profit of $959 million.
On Mr. Schrempp's agenda for expansion of financial products are:
Personal auto insurance (which BMW and Ford credit arms are setting up at U.S. dealerships)
Continued emphasis on financing all brands through the debis on-line website based in Dallas, www.giggo.com
Opening or purchasing a bank to offer loans of all types, credit cards and checking and savings accounts, and possibly auto rentals.
"Increasing the services has two aspects," Mr. Schrempp say. "Good margins and risk balancing because automotive is so cyclical."
Navigation systems sold in the F&I process are also in the DC chairman's sights. debis is negotiating with the Los Angeles-based Traffic Station for a traffic data center, providing data to subscribing drivers on position, destinations and times for arrival.
In Europe, DaimlerChrysler owns an auto insurance brokerage and late in 1999 debis bought a reinsurer in Dublin, Ireland.
In the U.S., BMW owns its own bank in Salt Lake City and in Europe, Volkswagen has an in-house bank that services owner financial needs.
Mr. Schrempp's model for stepping up the financial services side of DC business is General Electric. Half of its 1999 revenue and 41% of its net profit came from GE Capital, including an auto financing and leasing arm based in Barrington, IL.