Transcripts For BLOOMBERG The David Rubenstein Show Peer To

BLOOMBERG The David Rubenstein Show Peer To Peer Conversations July 13, 2024

David i dont 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 of running a private equity firm. How do you define leadership . What is it that makes somebody tick . David daimler benz is led today by ola kallenius, who is, among other things, the first nongerman to run daimlerbenz. Hes swedish but spent his entire career there and is recognized for his intellect, hard drive, and ability to make things work in a large bureaucracy. Like all people running automobile companies, there have been challenges, challenges from ridehailing companies, challenges from electric car companies. His biggest challenge, though, is trying to convince me to buy a new car. I havent bought a new car in 23 years. I like my mercedesbenz station wagon, 88,000 miles. It does well and i dont have to worry about anybody stealing it. He told me, actually maybe hes not such a good salesman, that if i hold onto it, its actually worth a lot more as a vintage car. So, for the time being, i have decided not to buy a new car, but if i do buy a new car, he has convinced me one of his would be a good car to buy. To make sure everybody understands, you are not a german, right . Ola no, i grew up in sweden, and i see that we have the swedish ambassador here today, as well. [applause] david i mean, i could see you being the ceo of volvo, maybe. [laughter] how did you get to be the ceo of a wellknown German Company . Has there ever been anybody not german who has been the head of daimler before . Ola no, and of course i was attracted by the three pointed star, but yes, im the first nongerman to take on the role. David so your predecessor, dieter zetsche, was very famous, with a very big, walruslike mustache. Did you feel you needed to have that to get the job . [laughter] did you consider growing a mustache . Ola well, up until this very moment, i hadnt considered it. [laughter] if it sells more cars, maybe i might. [laughter] david so now lets tell everybody how you actually came to be the head of daimler and mercedes. So you grew up in . Ola i grew up in sweden. I grew up in the south, in malmo, which is 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. David so you joined in 1993, after you graduated from school, graduate school. Ola thats correct. David so, did you start out by saying i think i could be the first swede thats the head of daimler . Did you think it was a realistic chance . Ola i dont know if that was the very first thought that crossed my mind. [laughter] i guess i just wanted 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. David today, the company is in three parts. Can you describe what the three parts of daimler are . Ola yes, we have, essentially, three businesses. The one business i think everybody in the room knows is its the car business. With mercedesbenz cars and vans, the leading premium luxury brand in the world, and the first car. Our original founders, Gottlieb Daimler and karl benz, invented the car. So thats 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 is the financial and Mobility Services that support industrial entities. David lets talk about the car division for a moment. Most people know it as mercedesbenz. But where did the name mercedes come from . Ola well, originally the company was the name of the founder. It was called daimler. He founded the company in 1886. And about 15 years later came a famous austrian industrialist. His name was jellinek. He was a racing enthusiast. And he went to Gottlieb Daimler and his main chief engineer, Wilhelm Maybach at the time, and said make me a racing engine. I want to go to nice and 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 daimler changed the name of the product not the name of the company. He just loved that name, mercedes, and it became mercedes. David suppose her name had been josephine, would we be calling this josephinebenz or . [laughter] ola it wouldve been a josephinebenz even if it had been brunhilda, maybe that [laughter] well see. But mercedesbenz works very well. Of course, the benz came later as the companies merged in the 1920s. David so, how many cars a year does mercedesbenz sell . Ola now were at about 2. 4 million, 2. 5 million. David roughly its 80 million cars sold a year around the world. Its Something Like 17 million in the United States, 28 million in china, and europe is roughly the same as the United States. Ola exactly. David the biggest market for cars in the world is china. I think i said they sold 28 million or Something Like that last year. Is that where your biggest market is, as well . Ola it is for our Passenger Car division, our biggest market, far and away. Last year, we sold about 700,000 cars in china. David those cars, are they manufactured in china . Ola most of them are manufactured in china. Some are manufactured in other places. We have operations 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. David youve lived in the United States as part of your career with daimler . Ola yes, ive been twice in alabama. I actually started out my career after the training period in alabama, and i came back later on as ceo of the corporation. David and you became a big alabama football fan . Ola i became a very big alabama football fan. So, on monday of next week, week, watching lsu play clemson week, watching lsu play clemson is very difficult for me. [laughter] but because weve been spoiled with so many championships, i guess were going to have to stand down on this one. [laughter] david if i had a car manufactured in alabama and an identical one manufactured in stuttgart, and i asked you to go in it, could you tell the difference between those two cars . Ola no, i couldnt. Its the same. We switched, more than 25 years ago, away from made in germany, which is a seal of quality, to say made by mercedes. If its made by mercedes anywhere in the world, its the same standard. David you make a lot of cars in the u. S. , but you make some outside the u. S. Are tariffs something you care about very much . Ola tariffs are 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 export around the world, like were doing with suvs in alabama, and have goods going back and forth. So yes, of course, global open markets are very important to us. David so when youre in washington, for example, you ever talk to government officials and say, by the way, we dont like tariffs very much . Ola everywhere we go, we have the same message. If we want the cake to be bigger, open markets have been a very good way to make a bigger cake. So whether were in washington, beijing, in brussels, or berlin, its the same. David teslas market capitalization is 86 billion, and yours is like 59 billion. So, is it embarrassing to have tesla have this big market cap . Ola maybe it should be encouragement. We want to create value for shareholders. And were not going to sit back and say is that market cap enough . Were going to go for it. Motors and ford together, their david of the cars you produce every year, 95 , i assume, are internal combustion carbon using engines, right . Ola at this stage. Because, of course, the Combustion Engine has worked so well. Yes, thats true. But were on the verge of a new era of mobility, so, gradually, that will change. David when will your electric cars really hit the market . Ola well, you could say we were there before the market was there. We were the ones who put europe, to start with the first volume production electric car into the market, which was our urban brand smart. That was in 2007. We were there but nobody else was there. Maybe we hesitated a little while, but now were in a massive product offensive. This cars in the market now, we market now. Maybe well bring it to the states beginning next year. In the next two to three years, there will be a whole family of cars in this socalled eq range. David youre trying to be Carbon Neutral by 2036 or Something Like that . Ola we have set an ambition that we call ambition 2039. What does that mean . The key was we launched this last year to say that, in 20 years time, we want to provide a ever whole our whole new car fleet Carbon Neutral. Technology agnostic but Carbon Neutral. But thats where the 2039 comes from. And because that seems far away for many people, even though thats a massive industrial change for the business, we have made an interim target by 2030 to have at least 50 of that fleet either fully battery electric or plugin hybrids. David now, for carbonrelated cars with internal Combustion Engines, theres always a fight about what the miles per gallon standard should be in terms of what the governments require cars to do. So, in this country, theres been a debate. There were certain obama standards. Trump has different standards, theres california standards. Whats your position on what the mile per gallon standard should be . Ola with the ambition 2039 that we presented last year, we have made a mental switch, and a very clear decision that our ambition is to provide co2 neutral mobility. We know its not easy. We know there are a lot of challenges on the way there. Were 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 thats why that is almost now a secondary debate to us. And we will, of course, apply the same strategy across the world. David tesla has made a big start in the electric car business. And in fact, teslas market cap is now 86 billion. And yours is like 59 billion. So, is it embarrassing to you to have tesla have this big market cap . [laughter] and it shouldnt be just to you. General motors and ford together, their market cap is not the same, not as high as tesla. So why are the other big Car Manufacturers kind of being left behind by tesla . Ola maybe it should be an encouragement. Of course, its the job of every company to create value, and we want to create value for our shareholders. And were not going to sit back and just say is that market cap enough . Were going to go for it. But theres a lot of uncertainty. The whole business is in transformation. Theres a lot of investment coming with this, uncertain markets, pressure on costs and margins. So i understand that theres 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 theres potential for us. David so if i had to buy stock today, should i buy stocks in tesla or in daimler . Which one is likely to go up . [laughter] ola i dont think youll ever have me recommend stocks of competitors. [laughter] and im a true believer in the company that im working for, so go with us. [laughter] but, of course, read the fine print. This is an unsolicited piece of advice. [laughter] and we have a lot of disclaimers and Financial Information you need to read before you make a decision. David so whats the biggest challenge daimler faces today . Is it tesla . Is it u. S. Regulations . Is it competition from other companies . Whats your biggest challenge . Ola there are so many. Its, of course, juggling a lot of balls at the same time. But i would say the overriding transformation, almost disruption of the Auto Industry is going co2free. Its a technological challenge. Its, of course, an industrial footprint challenge. And in the many years we do this, its also a financial challenge. So to balance that out, i would say is the biggest one. David who is your biggest competitor . Ola we have the traditional germans. For some reason, in southern germany, you have four brands, us and three others, that like to push each other. But you have, sometimes, new players, like the one from california and others. We watch, carefully, whats going on in the competitive landscape, but try to make sure that our position as a brand that stands for the promise of the future, that were always in the lead in this competition. David i have this car i got in 1997. Im still driving it. What do you think the residual value might be of that . [laughter] ola well, that is what we call a youngtimer. Its a youngtimer but its on the verge of becoming an oldtimer. David so whats the best new feature youre working on that s going to excite people in a year or two or something . Ola if i told you that, we would have to do the men in black thing. [laughter] 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 tada, here it is. David so, what car do you drive . Ola i drive the s class. David and you test drive all the models you guys are making . Ola its one of the privileges of the job. If you like cars and you like engineering, you have a very big sandbox you can play in. And we test our cars all the time. On a regular basis, we drive all the prototypes of the things that are in the pipeline. David i know that new cars are very appealing to some people, because when you get in them, they smell new. [laughter] do you try to do something that makes the car smell new . And is that part of appeal . And is there some places where the smell of a new car is not appealing . Ola it is part of the appeal. In traditional markets, like europe and u. S. , yes, you love that. Its, of course, its the leather that you mainly smell. But the new car smell, people love it. It feels fresh, like buying a new handbag or something. One country is different. Its china. They want to have it 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 neutral space. David so, when somebody goes to buy a car, they go in and say, i want a car with this color, this thing, do you have those cars made up in advance or do people get them made specifically for their tastes these days . Ola its different from market to market. Our experience here in the u. S. Is that most times when a customer wants to buy a car, after theyve done the research and done all of these things and they actually get to the dealer, they want to drive home. So you have to have the car finished and specd there. But if you want a tailormade suit, thats not a problem, and thats very often the model in germany. The tailormade suits available as well. David how much longer does it take to get that . Ola it depends on the model and the demand, but i would say at lease three months it would take to get that. David so whats the most popular color that you make for your cars . Ola well, in formula one, we race with the silver arrows, and silver has always been the color of mercedes. Its silver. David what are the most exotic options you have that arent part of the standard package . Ola well, of course, never underestimate the creativity and ingenuity of the engineers. So, once we make something standard, we come up with something new. One fun feature on the suvs that we 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. Its like being on a flying carpet. Thats one of those things. David ok, well. Alright, ill take a look at that. [laughter] why should somebody buy a used car . You have all these new cars out there, is buying a used car a good idea . Ola it is a good idea if you buy a certified preowned from mercedes. [laughter] theyre made with good quality, so they will last forever and a day. And as i said, its an many, especially in the german an aspirational brand for many, 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 do it. David suppose somebody is aspirational and they say, i want to say i have a mercedes, but i dont actually have that much money. What is the cheapest price you can pay to get a mercedes . Ola around 30,000. David how much . Ola around 30,000. David 30,000. So some dealers here will say they will sell a mercedes for 30,000, right . Ola a very barebones entry model. David ok, does it have a Steering Wheel and everything . [laughter] ola yeah. It will move from a to b. And since its mercedes, it will move from a to b in style. David lets say im not cost constrained. I want to impress my friends with the best mercedes i can possibly get with every option, every feature. What would that cost . 35,000 . [laughter] ola in that case, youve got to go for it. And, of course, the flagship of our range is the s class, the upper end. Of course, if you want to be a little more ostentatious, you can do the mybach s class, and then were talking 250,000. David how fast does that car go . Ola the car could probably go about 300 kilometers an hour, but we put in a restrictor in it, so it wont go faster than 250. Its enough. David that might be ok for me. Ok, so if i said i want a nice, germanmade car, even if its made in alabama or somewhere else, south carolina, wherever it might be, but i dont want to buy a mercedes because i want to try something else, what should i buy . Should i buy a porsche or a bmw . Which would be the best one . Ola is walking an option . [laughter] [applause] david so if youre 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 theyre getting the deal that they want and the car that they want . Ola as i said before, dont buy the price. Buy the product. And look at the product features. So, im slightly biased here, but if you think about safety, quality, exciting technology, efficient pow

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