6 Why does the boss want to do less?
Ola Källenius is a man with a plan. He’s surrounded by men and women with plans. He also inherited some plans. Everyone he meets has a plan for how he should be doing his job. No wonder Mercedes has such a broad, unwieldy range.
But that’s changing. As the 51-year-old Swede nears the end of his second year in the top job at he is determined to keep Mercedes more focused and more profitable.
He’s just announced the company’s financial results for 2020: car sales down 13 per cent, revenue down 11 per cent. Not terrible by any means – this is a company selling two million cars and half a million commercial vehicles a year – but the share price could be higher, and the gap between production and capacity could be narrower.
Some of it he can control. Some of it, like the speed with which the public embraces electrification, he can influence. And some of it – chiefly Covid – is a horrendous rogue factor ready to torch even the smartest plans.
In September he wooed analysts with his ambitious Strategy 2025, bristling with cost-saving measures, entrepreneurial adjustments and technological advances. But what’s the short-term message behind the freshly plotted game plan? ‘Covid is teaching us a lesson by advancing the digital new normal,’ he says. ‘To be prepared, we must waste no time defining and implementing the relevant technologies. On top of it, the future of modern luxury needs to be emotionalised by breakthrough content.’
He acknowledges that Mercedes needs to be fleeter of foot in these fast-changing times. Take for instance a key lighthouse project like the electric EVA2 architecture, which should send cold shivers down the spine of every competitor. Except it doesn’t. The programme was kicked off in 2014, the hot phase of the development process began in 2017, the start of production is finally due this year with the EQS, followed by the EQE and their respective SUV spin-offs. Seven years planning for a seven-year cycle in a world where technological leaps happen in two- to three-year intervals – how does this compare to the brand motto ‘The Best or Nothing’?
‘Agreed, we must accelerate our pace to match the faster innovation steps,’ admits Källenius. ‘That’s why there is MMA1 in the making. It will give us more flexibility in terms of components and interfaces even beyond 2030.’ MMA1 is the dedicated mid-size all-electric architecture.
Key to the Källenius approach to refocusing Mercedes is putting fresh emphasis on the sub-brands, and backing that with investment. He talks of thinning out the lower end of the Mercedes line-up – potentially losing the A-Class saloon, the B-Class and the CLA Shooting Brake – and diverting resources to AMG, EQ, G and Maybach.
‘The sub-brands must generate growing profits, but not necessarily more volume. To make this happen, Maybach gets a luxury version of the GLS in addition to the saloon, AMG gets its own electric architecture, and G gets an electrified EQG.’
He adds: ‘There is no need for AMG to compete in each and every segment. By refocusing on certain sectors, the brand can compete at eye level with Porsche, so its potential is obviously far from exhausted. Instead of sheer performance, unmistakable and highly emotional brand-specific dynamics may well be the future deciders.’
Maybach is looking at a four-seat high-end convertible, an XL-size rival to the Bentley Bentayga and an intriguing SUS (sports utility sedan) which could open a whole new niche. The G brand is considering an EQE-based electric SUV.
Even with his best streamlining efforts, running Mercedes is clearly still a massive job. ‘In my position, you never really reach your destination, be it because the targets have moved or because of changes in the operational framework. But I do love this job because of its all-encompassing challenges.’