Daimler CEO in the Green Hot Seat
September 13: Source – Der Spiegel
European automakers are trying to outgreen each other at this year’s Frankfurt Auto Show. The show organizers are offering eco-drinks. Volkswagen is handing out organic meat balls. And Mercedes is showing cars made of leaves. But the story changes when Der Spiegel asks a few tough questions.
The media usually gives industry executives a free pass at the major auto shows, dutifully serving up press releases. Kudos to Der Spiegel for looking beyond the greenwashing in Frankfurt—and conducting a tough interview with Dieter Zetsche, CEO of Daimler.
Here is an extended excerpt from the interview:
SPIEGEL: Mr. Zetsche, what kind of company car do you drive?
Zetsche: It varies. Right now it’s an S 600.
SPIEGEL: What kind of gas mileage does it get?
Zetsche: Just under 17 miles per gallon (14 liters per 100 kilometers).
SPIEGEL: You could drive a significantly more economical hybrid. But so far only your competition produces hybrids. Toyota already enjoys a much more environmentally friendly image because of this technology. Have you ever been envious of your competitor for this reason?
Zetsche: Certainly not for that reason, because our economical and clean diesel engines can certainly give hybrids a run for their money. But I do have respect for our competitors’ PR and marketing efforts when it comes to their hybrids.
SPIEGEL: So it’s all just clever advertising?
Zetsche: Not just that. But I also drive a Smart as my personal vehicle. It consumes a lot less gas than any Toyota.
SPIEGEL: The Smart is your company’s most economical model, but also one of its least successful. The project has supposedly cost more than €5 billion ($7 billion) to date. How much longer will you stick with the Smart?
Zetsche: It’s true that the Smart has cost the company money in the past. But if it didn’t exist, we would have to invent it now. But it’s also true that it has always been very successful in the market. We will be in the black with the Smart starting this year.
SPIEGEL: The hybrid engine is the first new type of automobile engine to come on the market in more than 100 years. But a Japanese manufacturer is responsible for the new engine, not Daimler, the company named after the man who invented the first car. Why did you fall asleep at the wheel?
Zetsche: It just so happens that we are the market leader in the hybrid segment…
SPIEGEL: How so?
Zetsche: … but only in the city bus sector, where I believe the hybrid makes the most sense. Because it is constantly accelerating and braking, a bus represents the most efficient use of hybrid technology. There are many other technologies, such as direct fuel injection, Diesotto, Bluetec and the fuel cell, which we are also pursuing. Nonetheless, we are no longer developing any cars without a hybrid option.
SPIEGEL: Out of conviction or because that’s what the market wants?
Zetsche: Out of conviction that it’s what the market wants. But I also have to say this: Some are currently touting the hybrid as our only salvation when it comes to automotive technology. It can’t be, partly because the higher price limits its marketability. We expect worldwide hybrid sales to increase to 1 million cars by 2010. That would be just under two percent of total automobile sales. Compare that to the worldwide production of clean diesel vehicles — about 13 million in 2010.
SPIEGEL: But your company, together with BMW, is also developing hybrid engines, and you plan to unveil 19 environmentally friendly models at the International Auto Show (IAA). Why have you waited so long?
Zetsche: We already decided which models we would be showing at the IAA two years ago. But the important issue is that we now have a modular concept that allows us to combine optimized gasoline engines and Bluetec diesel with hybrid options at will. And we will also provide specific dates for our market introductions.
SPIEGEL: Nevertheless, Mercedes-Benz still lags behind on environmental protection, even with its conventional engines. BMW scored the top five slots on a list of the most economical models in the mid-sized luxury class. Mercedes doesn’t even make it into the top 10.
Zetsche: You shouldn’t just be looking at certification figures, but also at real auto tests. That’s where the differences among the individual models amount to less than one mile per gallon (a half liter per 100 kilometers).
SPIEGEL: Are you saying that standard fuel consumption tests are unreliable?
Zetsche: No, but standards and reality are not always the same thing. I consider our company to be highly competitive in all areas. We have reduced fuel consumption in our lineup by 30 percent in the last 15 years — more than any other carmaker. We also have the potential to do better than that. And we now plan to improve fuel efficiency even further.
SPIEGEL: But your competitor, BMW, leads the pack of German manufacturers when it comes to fuel efficiency, right?
Zetsche: Certainly not as a rule, but perhaps on individual levels. That’s just the way competition works. Sometimes one company is the leader, sometimes another. We are clearly the leader when it comes to the world’s cleanest diesel technology, Bluetec, as well as in fuel cell technology.
SPIEGEL: Could it be that the population’s environmental consciousness is developing at a faster pace than technology?
Zetsche: Fuel consumption has become an important issue, but it is not the only criterion by which we measure the quality of a vehicle, nor will it be in the future. Other criteria that help us boost the emotional value of our cars for our customers are safety, comfort and performance.
SPIEGEL: Everyone is calling for economical cars, and yet gas-guzzling SUVs are booming in Germany. Does the consumer have a split personality?
Zetsche: There simply is no typical consumer. But many of our customers, even those who buy SUVs, have long opted for the clean and economical diesel engines we offer for these models. Of course, there are also drivers who always want the sportiest and most powerful version, while at the same time insisting that cars should not be allowed to have any CO2 emissions anymore.
SPIEGEL: Can you explain this contradiction for us?
Zetsche: We shouldn’t complain about it. The success of companies like ours is not based primarily and solely on the rationality of our customers. Emotions and enthusiasm are at least equally important.
SPIEGEL: It sounds as if you also benefit from the stupidity of customers?
Zetsche: It has nothing to do with stupidity. What it boils down to is that we also sell emotions, dreams and desires.
SPIEGEL: Is German Chancellor Angela Merkel also selling emotions when she makes climate protection a cornerstone of her policies?
Zetsche: I applaud what the chancellor is doing. She also seeks dialogue with the industry. In essence, it is in everyone’s interest, just as it is everyone’s responsibility, to reduce emissions of CO2 and other gases, because there is clear evidence that there is a relationship between carbon dioxide emissions and climate change. But the important thing is to achieve the greatest possible effect with as little effort as possible. Transportation must make a contribution here. But I would emphasize that it is one of many contributions.
SPIEGEL: Does the CEO of Daimler also discuss climate change within his own family?
Zetsche: I would be lying if I said that we focus on it constantly. But I have two nieces who are very involved. I like to discuss the issue with them, although I am both unable and unwilling to convince them that we are at the forefront of the environmental movement.