Episode 23: Dimitris Psillakis, President and CEO of Mercedes-Benz USA

For our 23rd episode of Full Throttle, we are joined by Dimitris Psillakis, President and CEO of Mercedes-Benz USA. Topics of discussion include Dimitris's experience in the American market, how the market is changing, the company's desirability rankings in Presidio's recent quarterly report, and much more!  

0:00 Intro 
5:17 How the American Market is Changing 
11:39 The Digital Transformation 
14:16 Desirability 
16:59 Mercedes-Benz' Dealer Partners 

Check out The Presidio Group on Linked In - https://www.linkedin.com/company/the-presidio-group-llc/

And The Presidio Group's Website - https://thepresidiogroup.com

Transcript

Welcome to the third episode of season two of Full Throttle, the Presidio Group's automotive industry podcast. I'm your host, Jason Stein, Director of multimedia and events at Presidio. On a regular basis Full Throttle serves as the industry's meeting point for great conversations with leaders across the automotive world.

It's a market which is extremely robust. It's, it's very competitive. Customers are very demanding. It's asking for high supports quality in, in services. So we've got a very demanding market, but at the same time, it's a changing market. 

And today our conversation turns to the automotive world of the OEM, and all the changes occurring and at a high rate of speed. Few better to talk the automaker world then Dimitris Psillakis, President and CEO of Mercedes Benz USA. Few executives have endured as many twists and turns as Psillakis since his appointment on New Year's Day of 2021. He's battled the effects of COVID, the resurgence of the industry, a changing consumer, and now the pendulum of ICE versus electric versus hybrid. But in a way, there are few better for the position, especially given his past. He's lived around the world, run regions and multiple corners of the globe, and is now three years into a role that has him running one of the most important divisions in the Mercedes empire, all the while trying to navigate the challenges of electrification. Today, we talk about the value of Mercedes dealerships, the priorities of this automaker and the path forward on technology. In a wide ranging interview, we're honored to have our first automaker on Full Throttle, Dimitris Psillakis. 

Hello, my name is Dimitris Psillakis. I'm the head of Mercedes Benz North America, and President and CEO of Mercedes Benz USA. And here we are with the Presidio podcast, Full Throttle.

Dimitris, it's wonderful to be with you. I thank you for being on the program today.

It's a pleasure to be back with you, Jason. 

Yes, indeed, we we've been a couple of places together, but I want to talk about your history for those who may not know who are who are listening in. Of course, Mercedes Benz dealers know you very well. I, I know of your history, and the fact that you have come from numerous places around the world to be here in Atlanta now. Give us just a little bit of a sense of where you've come from, and how far and wide those distances have been.

So yeah, as you can guess, so the audience can guess my name is Greek I come from from Greece, that's where I was born. But I studied and lived abroad for, I would say, more or less half of my life, all in all. So I joined Mercedes Benz back in 1992, and since then, have worked for Mercedes Benz in Greece, I have worked for Mercedes Benz in South America, based in San Paulo, Brazil. I've worked for Mercedes Benz in South Korea, obviously, for a short part in, in Germany, but also in Canada, leading Mercedes Benz in Canada and since December 2020 I'm leading Mercedes Benz North America based here in in Atlanta. 

How has your experience been so far? I mean, I know you had to deal with a lot during COVID and getting through all of that and adjusting to a new market a new environment. Tell me what that's been like for you.

I think it was a roller coaster experience, because picking up the responsibility for North America, after coming from from Canada, obviously, in picking up responsibility for US, our second biggest market for Mercdes Benz in the world. It's quite a challenge. And what made it more complex is obviously starting this new job at the middle of first year of the pandemic. Market challenges, transformation challenges, as we know, our industry is shifting from internal combustion engine vehicles to electric vehicles, digitization of the business, so several challenges for the market, but again, living in a period where people were not around, and what makes the business moving. Its people. So it was quite a roller coaster, I must say. 

Yeah, what have you learned through the process? Share that with me.

I would say basically two things. Nothing that you know, from the past, can be a can be confirmation of the future. That's one thing. And the second is that if you want to bring the change, if you want to find the way forward, you have to find it with the people and people around us have the ideas have the thrust to make the change. So don't take anything for granted on one hand. Second, work with your resources, this worked for me.

The idea of being in such a major market, like the United States, obviously presents its own opportunities and its own challenges as well. Now having settled into the position the way that you have, what are your takeaways from the American market? And maybe how it's changing.

You said it, it's basically changing. It's a market which is extremely robust. It's, it's very competitive. Customers are very demanding. It's it's asking for high support, quality in in services. So we know a very demanding market, but at the same time, it's a changing market. What is happening with the south is different than the North what's on the west, and it's different on the on the east side and changing if you take the influences that we have for example, we have the transition to electric vehicles. This is this is a challenge. We have basically shifting more and more towards SUVs towards more lifestyle ish vehicles. This is something that we are mastering with our dealer network.

And the dealer network has been talking, of course about all of these changes on a regular basis. Let's let's talk about electrification first. Where are we on the journey? I know that you and I have talked before about the transition to a more of a blended portfolio, hybrids. But for those who are listening for the dealers who who are listening to this, what is your vision of where we are on that propulsion pathway.

We've always said that the transition to electric vehicles, it's it's a marathon, it's not a sprint, you know that we have some end dates or targets, which have been set by the regulators, making simple by 2035, whether in California, or in the full of US, there's a target of 100%, zero emission vehicles. So we're working towards these targets but as you said, to all the listeners, who set out publicly, we keep our flexibility. So our offering purely battery, electric vehicles, and we committed by the end of the decades, every model that we have in the market will have its electric battery electric vehicle, sibling. We're offering our internal combustion engine vehicles and at the same time, we're bringing the plug in hybrids, which is the bridge between these two technologies. So full flexibility, we have them in the markets, and then it's our dealers, it's the market, it's the customers who decide which one its best. The idea that the living, the use that they make of the vehicle, and we're here to basically offer them full flexibility of choice. 

And you're thinking hyperlocal, too, aren't you? And this goes back to the statement that you just said, America being a place that has regional differences that are so distinct and so paramount than most other markets. What does hyperlocal mean to you in relative to EVs?

I mean, we have one country or to have 50 states. And we have not only difference, regulations, difference, taxation, but have also a lot of difference in behaviors of the customers. So for us, what we do or what to put under the umbrella of hyperlocal, we want to use data that we have, that we collect, obviously, from the markets and use to address the needs of each customer in each part of the country, with the right products with the right offering with the right marketing campaign. So basically be more focused, be more, more attentive to the needs of our different target groups, whether this is an ethnic difference, a cultural difference, whether you know, the North, obviously, 4X4s is, is a must, but in the south, four by two is okay, you don't need to, to invest on the value of the extra price of a 4x4. So this is what we call hyperlocal, be able to adjust all our doings along with our dealers, to the specific needs of the target groups around the country.

There's a notion that Mercedes Benz can maximize the natural market gravitation towards luxury. And I know Credit Suisse came out their global wealth study of just a couple of years ago, 34% of global wealth is held in the United States where there's only 4% of the global population that lives here, and what I found most amazing is that there are approximately 618,000 millennial millionaires already with a net worth of over a million dollars, very interesting. There is a gravitational pull towards those buyers, isn't there?

There is and I think Mercedes Benz as a brand, by definition is the brand to address this target group that you have just described, but we don't do that just by the brand name. We'll do it obviously, with the products that we design, and they'll bring in the market and we have what we call top-end vehicles or top-end brands, sub brands like AMG, Mercedes AMG or Mercedes Maybach, which are catering for exactly these, these customers and these needs, so offering exclusivity offering not only design, but also elements in the interior of the vehicle, exterior colors, rims, which are pretty unique or I would say can be 100% customized to the needs of the customer. So on one hand, special products, and enhanced full customization of these products to the needs or the wishes of these special customers.

How about the digital transformation over the air innovations and really delivering the promise of luxury that's tailored to the customer? Tell me a little bit about that, and what Mercedes Benz is trying to do in order to capitalize on that.

I think one of the one one thing that pandemic has taught us and has accelerated tremendously was the, the digital nature of us. I mean, look at us, normally a few years back, we would have a face to face meeting somewhere sitting in a couch and exchanging but you can do that virtually. Our vehicles today are not the traditional four wheels along the steering wheel vehicle, everything mechanic. Today, the vehicles are and becoming more and more computer on wheels. So on one hand, the customer is asking for more digital, more convenience, when they're dealing with us, with other brand, whether through our stores or directly with Mercedes Benz, and at the same time, our products are capable of receiving over the air updates like your mobile phone does, or even getting upgrades meaning services where the customer would subscribe or would buy and just over the air install on the vehicle. Therefore, adding more value or updating and upgrading its its functionalities that makes the products being always up to date, keeping its value, and being more functional for the user, or individualizing even the product further because the customer is adding more services on the vehicle he is driving. So this is in in a nutshell, the digitization we see both of the business but also of of the product. And to close this this chapter we come and we launch with our next products in 2025. We launch our own operating system, the Mercedes Benz OS, which is doing exactly that. It's unifying all the functions, all the control units, let's say under one operating system under one umbrella, which is is enough, the communication of the vehicle and therefore updates, upgrades that the vehicle can receive.

One of the items I want to talk to you about is is desirability, and you mentioned the word value just a minute ago, and Presidio in its latest quarterly report had surveyed dealers across the country in order to determine brand desirability. Roughly 285 dealers representing about 3100 stores, and Mercedes ranks incredibly high among luxury brands for desirability, and that is making it a desired and valued valued brand. What is your feeling on on that dealer sentiment around the brand? And also, by the way, it extends out to the value of of brands in general of Mercedes Benz on our valuation index ranks incredibly high. In fact, Mercedes Benz is that is the top five. What's your your view on that? 

Jason, well, first of all, I'm, I'm happy to hear that because you basically confirming with those numbers and so your your survey, the high ranking, you said top five, I hope what, number one, not only top five great in in vehicle desirability, because desire is part of our Northstar strategy. So we are our Northstar is to be the most desirable vehicle brand in North America, and I think desire goes along with with the brand Mercedes, but we need to fit on that. Our dealers and customers basically, grow with the dream of owning a Mercedes Benz vehicle. And I think this is  being fed by through our campaigns, through the product qualities, through the customer comments, but it's on us, very important to keep that and to further nurture it with the services we're offering with the stores, our showrooms, so the dealers and investing ads which gives this luxury and top experience and obviously at the end is our products that have to be specia,l have to be different, have to create this desirability with our customers. So it's a big effort of us as designers, us as manufactures of the products, us as marketers, but obviously, us as dealer network in the US, which is serving and supporting our customers throughout the lifecycle of our products. 

Mercedes is also very difficult to get as a as a dealership point, and in fact, I know that there's a strategy to keep many of the existing dealers if if there are acquisitions or, or sales that those would be kept within a network, Mercedes network. What's your, your feeling around the direction of where you want to take the network?

We call our dealers partners, and we will to them over the years of partnership where they trust on us and we'll trust on them on delivering not only delivering products to the customers but delivering the best experience. And that takes time to be developed. So this relationship is kept over the years through some tough obviously, criteria where we address our dealers and when we measure performance, and performance is not only quantity, but it's very much quality performance. And at the same time, we want to give this back to our dealer, so, despite the fact that our volume is growing in the country, we are determined to stay the same number of points or same number of investors, let's say. And if there are opportunities, let them grow the network or acquire for the for the dealerships. This approach, obviously, our dealers are becoming even stronger within the Mercedes Benz family. It's a sign of the trust we have on them. But at the same time that helps them obviously, reduce or dilute their operational cost over a bigger operation, a bigger area and a higher volume. So they can be more competitive, they can be even more profitable, and at the same time, we can take advantage of smaller and easier to control and maintain and steer dealer network. So it's a win win situation on both sides. And obviously on quality and presence in the market.

And the blue sky multiple range continues to increase, which I know is a sign of quality for you as well. Yeah. Dimitris, thank you so much for being on the program. Thank you for sharing your thoughts. You are the first automaker that we've had on this program in two seasons of doing this, and I'm honored to have you, we are, and thank you for joining me.

Thank you Jason was a pleasure again, thank you.

Thanks again to my guests Dimitris Psillakis, President and CEO of Mercedes Benz USA. And thanks for listening to Full Throttle, come back to us later in the month for our next interview on this platform. Email me with suggestions jstein@thepresidiogroup.com or go to the website, thepresidiogroup.com Follow us as well on LinkedIn. Thanks again for listening to the program. We'll see you next time.