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Daimler working on grass-roots shake-up

Bottoms up: Daimler chairman and head of Mercedes-Benz Cars Dieter Zetsche says 128 workers from around the globe hold the key to plans to shake up the company’s management structure.

More nimble structure planned so Mercedes can counter tech 'disrupters'

Mercedes-Benz logo8 Apr 2016

By RON HAMMERTON in NICE

CHALLENGED by new automotive industry “disrupters” such as Tesla Motors, German giant Daimler is set to become its own disrupter by shaking up the global management structure of the 130-year-old company to generate more ideas, faster.

A team of 128 Daimler workers from all over the world, ranging from staffers from the shop floor to directors – including two workers from Australia – have been toiling for three months on “prototypes” for a new company structure designed to put it on a more even footing with modern competitors such as the fast-paced tech start-ups entering the motoring market place.

Daimler AG chairman and head of Mercedes-Benz Cars Dieter Zetsche told Australian journalists at the S-Class Cabriolet launch in France that his company would be “toast” if it tried to defend traditional technologies and methods, rather than to embrace change.

Mr Zetsche also revealed that Daimler now regarded tech-based companies such as Apple, Google and Tesla as its prime competitors, rather than traditional rivals such as BMW and Audi.

He said the workers who had volunteered for the Leadership 2020 project had organised themselves in eight teams of 16, connected digitally, to come up with their ideas for change.

They plan to come together in Germany in a month to meld their eight “prototypes” into one or two systems that will go to Daimler’s top management for consideration as a replacement for the traditional hierarchical structure.

“Speed is the name of the game, and growth is the name of the game,” Mr Zetsche said.

“We have to maintain many of the strengths of our past as well, but at the same time we have to create this cultural ambience that allows us to work in a very different way.

“That’s exactly what we are doing, and we see it as a necessity. I am excited to see how our company will look tomorrow.” Mr Zetsche, whose own contract has just been extended for another three years, said he expected a very different company once the changes were implemented.

“Just doing it (the leadership project) that way is already part of the change in the company,” he said. “These teams working together without any hierarchical implications, in a virtual world, are already making the change.”

As for Tesla, Mr Zetsche said Mercedes-Benz was already working on an all-new electric car with a range of between 400 and 500 kilometres, for launch in the next two to three years, along with 10 plug-in hybrids.

The electric vehicle will take the fight up to the likes of Tesla, of which Daimler was a part owner until it unloaded its shares in 2014.

Mr Zetsche said he welcomed newcomers such as Tesla to the auto industry, but he was qualified in his opinion about the prospects of success for the Californian electric car builder that has taken about 300,000 deposits from would-be buyers of Tesla’s planned Model 3.

He said Tesla founder Elon Musk had proved himself a strong public relations operator.

“As long as the information he is giving is correct, it sounds promising,” he said. “As far as the economics are concerned, we have to see.

“There is no doubt that he is the only one so far who has been able to create that sort of excitement on electric vehicles, not exclusively related to their electric drivetrain but the overall approach he is generating.

“I do believe it is very good to have fresh and different approaches to the market. The only mistake you shouldn’t make is to take a defensive stance, but to consider a new competitor as a welcome challenge.

“At the moment he is offering a package that none of us can offer. But, of course, we are all working of packages that are similar, and hopefully we can maintain some of the strength of the traditional car manufacturer.”

Mr Zetsche said Mercedes-Benz’s strength was its ability to resolve apparently conflicting issues with new models, such as how to generate more performance while improving efficiency and keeping costs in check.

But he said he saw new technologies such as electric powertrains, autonomous vehicles and greater connectivity as “tremendous opportunities to improve our offerings to our customers”.

“If we are defending anything we did yesterday, we will be toast,” he said.

Last year, the Daimler group – which includes subsidiaries such as Smart and Freightliner – achieved a record 2.9 million sales, up about 400,000 units on 2014.

Mercedes-Benz has started 2016 on record pace, selling 518,940 vehicles in the first quarter, up 13.2 per cent on the same period last year.

With the new E-Class large car just coming on stream, firstly in Europe and then other markets including Australia later in the year, Mercedes is well placed to smash more records and take the luxury car crown from closest rival BMW.

The E-Class is one of a dozen new or upgraded Mercedes models to be launched this year as the company celebrates its 130th anniversary.

Others include the range-topping S-Class Cabriolet, GLC Coupe and GLS SUVs and the replacement for the SLK sportscar, the SLC.

“All of the signs indicate that 2016 will also be a good year for Daimler,” Mr Zetsche said. “As in previous years, we expect the second half of the year to be significantly better than the first – with the increasing availability of the new E-Class and more attractive hedging rates.”

Mercedes’ biggest market, China, looms large in the company’s hectic growth, with Mr Zetsche saying he expects the brand to continue to grow faster than the market this year.

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