Mercedes-Benz CEO: "2024, we saw a market that was quite challenged."

CGTN Europe

CGTN Europe interviewed Ola Källenius, chief executive of Mercedes-Benz

Transcript

00:00Hello, welcome back to Global Business Europe. Mercedes-Benz is flashing its hazard warning

00:11lights announcing it expects earnings to fall further this year after a slump of 30% in

00:172024. The German giants unveiled further cost cutting and more petrol cars than electric

00:23vehicles in its new product range to boost performance. Mercedes is not alone in facing

00:28challenges as auto executives across Europe warn of rising energy and labour costs. Juliet

00:33Mann spoke to Ola Kolonius, the CEO of the Mercedes-Benz Group. If we look at 2024, we

00:40saw a market that was quite challenged, especially in China towards the second half of the year.

00:49And in that environment, we have printed today very solid results, especially the free cash

00:55flow above 9 billion euro. It's a very, very strong number considering the macro and market

01:03environment and also in our competitive set. But we're not complacent. We're going to continue

01:09to work on new technology, new products, but at the same time at our efficiency levels.

01:15But the demand just doesn't seem to be there for EVs, does it? I mean, what's it going

01:20to take for you to get the business to where you want it to be?

01:24The EV market around the world is heterogeneous. And in China, it has started kind of going

01:31from the bottom, going up. And we have our strongest footprint on the top end and the

01:36higher segments, where still the electrified high-tech combustion engine is the choice

01:41customers are looking for, where we have a very, very strong market position. But we

01:47are gradually growing organically our EV footprint. And in Europe, in the United States as well,

01:54we're about to launch a whole host of EV vehicles here in the next two to three years.

01:59On top of that, class-leading plug-in hybrids.

02:02There are some bumps in the road, though, aren't there? I mean, tariffs are a pain.

02:05But isn't the big issue all around costs? I mean, you're competing with some of the

02:10big Chinese companies, for sure, when it comes to cost, when it comes to technology, when

02:16it comes to market share.

02:17It is true that the macro environment is difficult. And 2025, we take a cautious view on that.

02:24And there is a high level of competitive intensity. How do you approach that as Mercedes-Benz,

02:29the inventor of the automobile? It's through innovation and new product. And we have the

02:34biggest product offensive coming in the history, product and technology innovation offensive,

02:39in our history, in the next couple of years.

02:42But it's also about efficiency. We're doubling down on efficiency. And we're going through

02:47literally the whole company, the whole business system, and leaving no stone unturned.

02:53We want to save up to €5 billion, compared to our original plan in 2027, and savings

03:00leading up in 2025 and 2026. So it's a situation where we're investing more than we've ever

03:06done before into new technology and products. But at the same time, we're emphasizing the

03:11efficiency efforts.

03:12You're also investing really big in China, aren't you? I mean, that's your largest single

03:18market. But you look at the sales figures, those are being squeezed. I mean, what's the

03:22future for the brand?

03:24In China, over the next years, we are embarking on a 14 billion renminbi investment program

03:29into new models, revamping our factories and getting ready for launch of these new models,

03:35both on the EV side, but also on the high tech side. In 2024, in very challenging market

03:43conditions, we actually were the number one luxury and premium brand in China. But it's

03:48not just about that. It is now going forward into the future with new and attractive products,

03:54specifically designed for the Chinese market.

03:57Let's move from China back to your home turf, to Germany. Big election coming up this weekend.

04:04What does the car industry need to do, or need to see the new government doing to fix

04:09the ailing economy? Because a lot of the pressures have been coming from the declining auto sector.

04:14I think we need to take the whole European view on this. Last year, the Commission asked

04:20Mario Draghi to do an inventory of European competitiveness. When I read that report and

04:26I had a chance to speak to Mario Draghi himself, I left that meeting thinking to myself, let's

04:32do that. And the first competitive compass that has now been presented by the EU Commission

04:39goes in that direction.

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