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00:00If you start out saying I think I can be the first Swede to be the head of a climber. I don't know if that was the very first thought that crossed my mind. What kind of car do you drive. I drive the ISE class. You test all the models that are set your guys from my finger. It's one of the privileges of the job. If I had to buy some stock today I'd buy stock and test for it . Worrying Daimler. Which one's likely to go up. I don't think you will ever have me recommend stocks of competitors . Would you fix your tie please. People wouldn't recognize me if my tie was fixed but it just seemed to sweet . All right . I don't consider myself a journalist and nobody else would consider myself a journalist. I began to take on the life of being an interviewer even though I have a day job running a private equity firm . How do you define leadership . What is it that makes somebody tick . Tock Diner Bands is led today by older millennials who is among other things the first non German to run Daimler Benz. He's Swedish but he spent his entire career there and recognized for his intellect his hard drive his ability to make things work within a large bureaucracy. Like all people running automobile companies. He has some challenges challenges from wide hailing companies challenges from electric car companies. His biggest challenge that was trying to convince me to buy a new car. I haven't bought one in twenty three years. I like my Mercedes Benz station wagon 88. Eighty eight thousand miles does quite well. Not to worry anybody stealing it. And he told me that actually maybe he's not such a good salesman that if I hold onto the car it actually be worth a lot more as a vintage car. So for the time being I've decided not to buy a new car but if I was going to buy a new car he's convinced me that one of his cars would probably be a very good part of my . Make sure everybody understands you are not a German right. No I grew up in Sweden and see that we have the Swedish ambassador here today as well. So I mean I can see you're being the CEO of Volvo maybe. But how did you how did you get to be the CEO of a well-known German company . Has there ever been anybody not German who's been the head of the diner before. No. And of course I was attracted by this three pointed star. But yes I'm the first non German to take on this role. So your predecessor Dieter section was very famous with a very big walrus like mustache. Did you feel you needed to have that to get the job or you didn't think you needed that . Did you ever consider growing a mustache. Well up until this very moment I haven't considered it . If it sells more cars made me maybe I might . Want tell tell everybody how you actually came to be the head of Dynamo and Mercedes. So you grew up in. I grew up in Sweden . I grew up in the south in Malabo interest the third biggest city of Sweden. But through my university studies I came in contact with the company and have been with the company for my whole career. So you joined in 1993 if you graduated from school and graduate school is that right. That's correct. OK. And did you start out saying I think I can be the first Swede to be the head of Finland. Or did you did you think it was a realistic chance. I don't know if that was the very first thought that crossed my mind. I guess I just wanted to try to find my feet around the company in the beginning. I was fascinated about the products but this big company has given me a lot of opportunities. And many years later the greatest opportunity . Today the company is in three parts. Can you describe what the three parts of dining there are. Yes we have essentially three businesses. The one business that I think everybody in the room knows it's the car business with Mercedes Benz cars and vans the leading premium luxury brand in the world. And the first car are original founders Gottlieb Dahmer and Carl Benz. They invented the car. So that's what everybody knows. But of course we are the biggest truck and bus maker in the world as well which is our second division. And our third division are the financial and mobility services that support these industrial entities. Let's talk about the car division for a moment. So most people know it as Mercedes Benz. But where did the name Mercedes come from. Well originally the company was the name of the founder was called Daimler. And he founded the company back in 1886 and about 15 years later became a famous Austrian industrialist industrialist. His name was Yellow Nick. He was a racing enthusiast. And he went to Gottlieb Daimler and his main chief engineer Bill and my boss at the time and said make me a racing engine. I want to go to NIS and I want to compete in this race and I want to win. So they made him an engine. They made him a car . He won the race and the prerequisite was the car should be named after his daughter Mercedes and the rest is history. So Diamond changed the name of the product not the name of the company changed. He just loved that name Mercedes and it became Mercedes. I suppose her name had been Josephine would be calling this Josephine Benz or it would have been a Josephine Benz even if it would have been brewing. Hilda. Maybe that will. We'll see. But Mercedes Benz works quite well. And of course the Benz came later on as the companies merged in the 20s . So the cars how many cars a year does Mercedes Benz now sell . Right now we're at about 2.5 2.5 million. So roughly it's about 80 million cars sold a year around the world. Yes I think it's something like 17 million the United States 28 million in China . And Europe is roughly the same as United States. Exactly . The biggest market for cars in the world is China. I think I said they sell 28 million or something like that last year. So is that where your biggest market is as well. It is for our passenger car division by far and away our biggest market. We had last year we sold about 700000 cars in China. Now those cars where are they manufactured in China. Most of them are manufactured in China and some of them are manufactured in other places. In fact with our operations here in Alabama in the U.S. we are one of the biggest industrial exporters to China. So we rest on local production but also a global production network . Now you you've lived in the United States as part of your career . A diner. Yes I've been twice in Alabama. I actually started out my career after the training period in Alabama. And I came back later on as a CEO of that operation. And you became a big Alabama football fan or not. I became a very big Alabama football fan. So on Monday of next week watching LSU play Clemson is very difficult for me. But because we have been spoiled with so many championships I guess we're gonna have to stand down on this one. So. So if I had a car that was manufacturing Alabama an identical one Maryland manufacturing should start and I ask you to go in it . Could you tell the difference between those two cars. No I couldn't. Because it is the same. And we switched actually more than 25 years ago away from a made in Germany which is of course a seal of quality to say made by Mercedes. So if it's made by Mercedes anywhere in the world it's exactly the same standard same standards in every plane. So you make it a lot of cars in the United States but you make some outside the United States. So are tariffs something you care about very much . Tariffs is very important to us because of course we rely on global supply chains. So we rely on being able to build a car in one place. And exports around the world like we're doing with the SUV is in Alabama and have goods going back and forth . So yes of course global open markets are very important when you're in Washington for example. Do you ever talk to government officials and say by the way we don't like tariffs that much everywhere we go. We have the same message if we want the cake to be bigger. Open markets have been a very very good way to make a bigger cake . So whether we're here in Washington or in Beijing or in Brussels or in Berlin it's the same message. Tesla's market capitalization is now eighty six billion dollars and yours is like fifty nine billion. So is it embarrassing to you to have Tesla have this big market cap. Maybe it should be an encouragement. We want to create value for our shareholders and we're not going to sit back and just say is that market cap enough. We're gonna we're gonna go for it . Probably cars that you produce every year. Ninety five percent I assume are internal combustion carbon using engine cars. Is that right . At this stage because of course the combustion engine has worked so well. Yes that's true . But we're on the verge of a new era of mobility. So gradually that will change. When will your electric cars really hit the market. Well you could say that we actually were there before the market was there. We were the ones that put Europe to start with the first volume production electric car into the market which was our urban brand smart. That was back in 2007. We were there but nobody else was there. So. So maybe we hesitated for a little while. But now we're in a massive product offensive. This car is in the market now. We will bring it to the states beginning of next year in the next two to three years. There will be a whole family of cars in this so-called IQ range. Are you trying to be carbon neutral by was a 20 36 or something like that. We have set an ambition that we call ambition 20 30 9 9. What does that mean. The key was we launched this last year to say in 20 years time we want to provide our whole new car fleet carbon neutral technology agnostic but carbon neutral. So that's where the 2039 comes from. And because that seems far away for many people even though that is a massive industrial change of the business. We have made an interim target by 2030 to have at least 50 percent of that fleet either fully battery electric or plug in hybrids . We did this now for carbon related cars internal combustion engines. There's always a fight about what the miles per gallon standards should be in terms of what governments require cars to do. So in this country there's been a debate as certain Obama's standards or as Trump has different standards there's California standards. What is your position on what the MPG standards should be with ambition. Twenty thirty nine that we presented last year we have made kind of a mental switch and a very clear decision that our ambition is to provide CO2 neutral mobility . We know it's not easy. We know that there are a lot of challenges on the way there. So we're on a we're on a journey and that is a worldwide journey. So almost regardless of which standard you have in different markets the toughest one right now is in Europe. We feel that we will meet every one of those standards . And that's why that is almost now a secondary debate to us. And we will of course apply the same strategy across the world . Tesla has made a big start in the electric car business. And in fact Tesla's market capitalization is now 86 billion dollars and yours is like fifty nine billion. So is it embarrassing to you to have Tesla have this big market cap and it shouldn't be just the youth that General Motors and Ford and together their market cap is not the same as high as Tesla. So why are all the big car manufacturers being left behind by Tesla. Maybe. Maybe it should be an encouragement . Of course it's the job of every company to create value and we want to create value for our shareholders. And we're not going to sit back and just say is that market cap enough. We're going to we're gonna go for it. But there is a lot of uncertainty in the whole business is in transformation. There's a lot of investment coming with this uncertain markets pressure on on costs and margins. So I understand that there is a certain nervousness in the market. But if another startup that is going for the new thing can generate those kinds of market caps then maybe there's potential for us. So if I had to buy some stock today should I buy stock in Tesla or in Daimler which ones like to go up. I don't think you will ever have me recommend stocks of competitors . And I'm a true believer in the company that I'm working for. So go with us. But of course read the fine print. This is an unsolicited piece of advice and we have a lot of disclaimers and financially information you need to read before you make a decision. What's the biggest challenge the diner faces today . Is it Tesla. Is it U.S. regulations. Is it just competition for other companies. What's your biggest challenge. There are so many. It's of course juggling a lot of ball balls at the same time. But I would say the overriding transformation almost disruption of the auto industry is going CO2 free. That's a technological challenge. It's of course an industrial footprint challenge . But it's during the many years that we will do this it's also financial challenged. So to balance that out I would say is the biggest one. And who's your biggest competitor. Well we have the traditional Germans for some reason in southern Germany . You have four brands ISE plus three others that like to push each other . But you have sometimes new players like the one from California and others. We watch carefully what's going on in the competitive landscape but try to make sure that our position as a brand stands for the promise of the future. We're always in the in the lead in this in this competition. I have this car I've got in 1997. I'm still driving it. What do you think the residual value might be of that . Well that is what we call a young timer. It's a young timer but it's on the verge to becoming an old timer . So what's the best new feature you're working on that's going to excite people in a year or two or something. If I told you that we would have to do the men in black thing. OK so we have some spectacular things obviously. But you keep your cards close to the chest. And then when you have a big reveal you go to die. Here it is. So what kind of car do you drive . I drive the ISE class. And you test all the models that you guys are making or it's one of the privileges of the job. If you like cars and you like engineering. You have a lot of the other very big sandbox that you can play. And we test our cars all the time. So on a regular basis we drive all the prototypes of the things that are in the pipeline. Now I know that new cars are very appealing to some people because when you get in them they smell new . What do you try to do. Something that makes the car smell new . And is that part of appeal. And is there some places where smelling a new car is not appealing. It is part of part of the appeal in traditional markets like Europe the U.S.. Yes. You love that is of course it's of course the leather that you mainly smell. But you have this new car smell and people love it. It feels fresh maybe like buying a very nice new handbag or something . One country is different. It's China. They want to have a neutral . They want to have the car neutral not smelling like anything . So there we actually go out of our way to engineer it such that when you step in you just have a really neutral space. So when you go to buy when somebody goes to buy a car and they go in they say I want a car with these this color this thing. Do you have those cars made up in advance where people get a maid specifically for their taste these days. It's different from market to market. Our experience here in the US is that most times when when a customer wants to buy a car they after they have done the research on the net and done all these things and they actually get to the dealer they want to drive home. So you have to have the car finished aspect there. But if you want the tailor made suit it's not a problem. And that's very often the model in Germany. So the tailor made suit is available is when it takes much longer to get that ad depending on which model and what the demand is. But usually I would say at least three months you would have to wait if you get that. OK. So what's the most popular color that you make for your cars. Well in Formula One we race with the silver arrows. And silver has always been the color of Mercedes. It's silver. What are the most exotic options you have that aren't part of the standard package. Well of course never underestimate the creativity ingenuity of the engineers. So once we make something standard we come up with something new. One fun feature on the SUV is that we'd just launched last year is what we call an electronic chassis system that can actually individually regulate the height of each wheel instantly. And a camera reads the road in front of you. So when it sees a bump it adjusts before you hit it. So it's like being on a flying carpet . That's one of those things. OK. Well all right. I'll take a look at that. But why should somebody buy a used car. You have all these new cars out there. You're buying used cars. Is that a good idea. It is a good idea if you buy a certified preowned from Mercedes . Of course they are made and they're made with good quality. So they will they will last forever and a day. And as I said it's it's a it's an aspirational brand for many and especially in the German market. The first Mercedes for many is a used Mercedes because you get into the price bracket where maybe you can maybe you can do it. I suppose somebody is aspirational and they say I want to say I have a Mercedes but I don't actually have that much money. What is the cheapest price that you can pay to get a Mercedes. Wrong 30000. How much. Around 30000 thirty thousand dollars. So some dealers here will say that they will not sell a Mercedes for thirty thousand dollars right. Very bare bones entry model. OK. Does that have a steering wheel and everything . It will move. It will move from A to B. This is it. Since the Mercedes it will move from A to B in style. All right. Let's suppose I say I'm not that cost constrained. I wanna impress my friends with the best Mercedes I can possibly get. With every option every feature. What would that cost. Thirty five thousand or in . In that case you got to go for it. And of course the flagship of our range is the S class the upper end . And if you want to be a little bit more ostentatious you can do the Michael Barr s class and then we're talking two hundred and fifty thousand. And how fast is that cargo . The car could probably go above 300 kilometers an hour but we put in a restrictor in in it so it won't go faster than 250. OK . Well that's a it's enough. It's OK for me. But OK. So if I said I want a nice German made car even if it's made in Alabama or somewhere else South Carolina where it might be. But I just don't want to buy a Mercedes because I just want to try something else. What should I buy. Should I buy a Porsche or should I buy a BMW which would be the best one. Do you think is walking in option . So if you were giving advice to somebody that wants to buy a car today what would you give the advice to them about how to negotiate the best price and make sure they're getting the deal that they want and the car they want. As I said before don't buy the price. Buy the product and look at the product features. So I'm slightly biased here . But if you think about safety quality exciting technology efficient power trains and so on. Think about that. And whether it's a thousand dollars up or down in the end that matters less and perhaps in total cost of ownership. Buying a more expensive car in the end with residual value might even be the better buy. And the residual value is that holding up for Mercedes is better than other cars are. Pretty good. Pretty good. So the second hand market though Mercedes is a very try to like I have this car I got in 1997. I'm still driving it . What do you think the residual value might be of that . Well here's a little known fact. If you would have gone back to let's say you said nineteen ninety seven. Right. Twenty three years old. Yeah. So that is what we call a young timer. It's a young timer but it's on the verge to becoming an old timer . If you had in 1997 invested your money in classic Mercedes cars . Right. Right. Classic Mercedes car says in old sales and so on. And you look at the index of deaths over the last 25 years it beats the S & P 500 and most other asset classes that you could have picked. So my advice now would be hold on to that one because it will it will come into its own and like like a Bordeaux wine. It will then get better over. Right now I'm going to hold onto it. OK. So you are you became the CEO when you're only 50 years old. You're only 50 now. Right. 50 years old. So very young. By my standards I'd say like a teenager practically. So how long can you do this job. You can do this for. There's no age limit. So you could do this for 15 or 20 years. Your predecessors both did it for about a dozen years or so each . I'm not thinking about that so much right now. No it's about doing what I do today and then tomorrow and navigate through this transformation. So it's not on my mind but I know it's going to be a very exciting journey here as the whole company is in transformation over the next. So let's suppose somebody is in college now . They're saying I want to join a nice industry. Why should somebody who want to join the automobile industry. Well since I just came from the CBS in Las Vegas which stands for This is what happens tomorrow at the Electronics Show . If you go to that if you go to that now compared to 10 years ago even the tech companies use cars to demonstrate their future technology. So I don't know if there a more exciting business than the auto industry. And we're always going to want to go from A to B or transport goods from A to B. And now we have more technological tools. So this is an industry in motion in transformation. And what's more exciting than not .

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