The expansion of Chrysler in Europe is progressing slower than expected. DaimlerChrysler in the USA says the time is not yet right to start competing in Europe's volume segments. Jim Holden, who took over as head of DaimlerChrysler in North America in September 1999, spoke to Automotive News Europe Executive Editor Peter Brown and Staff Reporter Michael Woodyard on May 3 in Auburn Hills, Michigan. The following is an edited transcript.
Will a small Chrysler brand car come out of your relationship with Mitsubishi?
We don't know yet. There have been discussions with the Smart guys on one project. We've been in discussion with Mitsubishi continually, pre-deal and now in the closing phase, on a lot of things.
We haven't had a small car as a super high priority because we haven't found a way to make it a commercial success. So our small car strategy is primarily PT (Cruiser).
We do, in the long run, need some smaller vehicles to get access to segments such as Mexico and elsewhere. But we're not going to do it until we can leverage somebody else to the point where it also makes money. We'll be exploring that with Mitsubishi once we get the deal closed.
Europe will have a fuel economy problem with upcoming corporate average fuel economy (CAFE) rules. How will Chrysler deal with that?
My guys in Europe also want us to do a small car. We're yelling at them: 'Build a distribution network.' They're saying: 'We are not playing to 50 percent of the market. Where's our small car?' So we roll out a Neon, and they say: 'That's a small US car, but it's not small in Europe. Where's my small car?' We'd love to service that long term. But if you have to do it all by yourself, the first economical increment is 300,000 of them. We're not mature enough to sell 300,000.
What are the synergies with Mitsubishi and the Chrysler group in North America?
There are lots of things. We have a huge distribution network. If I look at what we did with Mercedes - our parts distribution and logistics on $3.3 billion worth of parts sales - putting that together for delivery and warehousing is huge. A lot of the same things could work for Mitsubishi as long as they make sense for both parties.
Are fuel-cell vehicles the future?
They are still very experimental. But it's very hopeful. It's a lot brighter than electric vehicles, based on where battery technology is. Among all those trying, we're on the leading edge. That is a result of the synergies of the merger because Mercedes was there ahead of us.
Mercedes-Benz's new product offensive is largely over. But the company is not standing still, says Paul Halata, the new president and CEO of Mercedes-Benz USA. Automotive News Europe Staff Reporter Jim Henry interviewed Halata in Montvale, New Jersey, at the end of April.
You, Jaguar and BMW have both more than doubled sales in the past few years. Do you have other products that will double sales again?
Going back to the early 1990s, we started talking about a product revolution at Mercedes-Benz, and we are living with the results today. For years, we were at half a million units production a year or so, and then all of a sudden, we wanted to go to 1 million. But with some of the new models we have coming we are not talking tens of thousands, but only a handful of them, like the Maybach (a Rolls-Royce fighter) and the SLR (a Ferrari fighter).
What about the A-class? Is that part of your plans (for North America)?
We are still considering it. It could potentially be sold in the USA. It's a true Mercedes, in spite of our original fiasco (when the A-class failed a magazine's 'moose avoidance' test).
BMW recently confirmed it will add an X3, a smaller sport-utility like the X5. Are you interested in that small sport-utility segment?
We are looking at all the opportunities in the market. But you have to consider that we are not just Daimler-Benz anymore. We have formed a group called DaimlerChrysler, which includes Jeep.
Do you report to DaimlerChrysler headquarters in Auburn Hills (near Detroit) now?
Jim Holden (president of DaimlerChrysler in North America, see interview on this page) is responsible for the USA, Canada and Mexico, but for product, pricing - what you could call the whole marketing piece - Stuttgart is where the product is made and where the product is designed. I have a lot more contact with Stuttgart than Auburn Hills.
Your predecessors used to complain it was hard to get products sufficiently tailored to the US market. Is that still a problem?
We were building cars that were more or less for the European market, without air conditioning, without automatic transmissions. I don't think it was the design so much as the equipment. I think now that we have crossed that bridge to where I think you can hear the Germans complain that it's almost too much - that we are building for American tastes first.