The tornado of Mercedes has a way of driving a hard bargain

THE MONDAY INTERVIEW: Helmut Werner

As he looks at you over a pair of half-moon spectacles, Helmut Werner, the white-haired, conservatively dressed chief executive of Mercedes Benz, looks as though he has just stepped out of an advert for one of his own cars.

But the 60-year-old's radical transformation of Mercedes belies his old- fashioned image and the traditional aura that has for so long surrounded the company itself. "For decades we set our game plan according to the market. But after the Eighties, as Mercedes' enormous profits came to an end, we had to make an abrupt change," says Mr Werner.

Increasingly tough competition for luxury cars, the worldwide recession and changing customer demands made the automobile giant reel. When Mr Werner took over as chief in 1993, with the company deeply in the red, clients were no longer prepared to wait more than two years for an order.

Spoiled with success over the past decades, he freely admits Mercedes became fat and sluggish: production costs of competitors were 20 per cent lower. But Mr Werner, a former German backstroke champion, was determined to give the company a new lease of life.

His first move to define a new strategy placed more emphasis on productivity, product planning and global markets. But it is when the conversation switches to Mercedes' future that Mr Werner gets excited. "Over the next few years you'll find us developing lots of new models and appearing in lots of new product sectors and markets where there's potential."

And the change is already under way. For a start there's the extraordinary joint venture with Swatch, the Swiss watch maker, to develop the so-called "Smart car", due to be launched in 1997. This motorised shopping trolley is expected to cost about pounds 6,000, a third of the price of the cheapest Mercedes cars.

"There is an enormous market for vehicles like the Smart car," Mr Werner claims. But the venture also involves huge risks. Mercedes lives off its exclusive reputation and cannot afford to devalue its brand image. Mr Werner's dilemma is that the projected growth in the market for big cars is minimal.

Mercedes also plans a small car of its own to compete in a higher price bracket with similar offerings from Audi and BMW. There's a four-wheel drive joint venture with Porsche which will take on the likes of Land Rover.

The innovative approach is not limited to products themselves. Mercedes is working on a leasing deal that will give existing leasing customers the chance to drive different models when they want. They could have an open-top car in the summer, a four-wheel drive in winter, a limousine for special occasions.

Mr Werner expects pool-leasing eventually to be as common as conventional leasing is now. Pilot projects have started in Britain and Germany.

Employees have nicknamed Mr Werner the tornado. He makes so many things happen, they say, that you never know what is coming next. But one thing that will definitely stay on Mr Werner's list for a while is the loss- making truck business.

"We expect the truck division to be back in the black in 1998, but there's still a long way to go to improve productivity."

Mr Werner's approach hasn't made him a lot of friends in the European businesses. In the past few years Mercedes has cut 30,000 jobs, most of them in its German heartland.

At present it makes 5 per cent of its passenger cars outside Germany, but Mr Werner estimates that in 10 years this could soar to 25 per cent. Significantly, the new Smart car will be built in France.

"The days of exporting everything are gone. In Brazil, for example, they have import duties of 70 per cent, which means that we can only sell a big number of cars there if we produce in the country," he explains.

There are pressing financial reasons for Mercedes to "go global" as well. The Alabama plant helps the company to manage its foreign exchange operations. Last year Mercedes had to face enormous currency losses due to the strength of the mark against the dollar. Perhaps this is one reason Mr Werner is such a convinced advocate of European Monetary Union.

"Last year's currency turbulence in Europe burdened Mercedes-Benz alone with extra costs of DM600m [pounds 255m], which means we have to cut our costs by the same amount because we can't put up our prices. This means for Germany 6,000 jobs are in danger, which tells us that we have more to fear from the present currency situation than from EMU."

And if his present form is anything to go by, Mr Werner will get his way on EMU, as he does with most other things.

Next week he meets Hans Tietmeyer, head of the Bundesbank, to discuss the single currency. Mr Werner drives a hard bargain.

Start your day with The Independent, sign up for daily news emails
News
Sir David Attenborough
people
Life and Style
Young girl and bowl of cereal
food + drink
News
Comic miserablist Larry David in 'Curb Your Enthusiasm'
peopleDirector of new documentary Misery Loves Comedy reveals how he got them to open up
Arts and Entertainment
Henry VIII played by Damien Lewis
tvReview: Scheming queens-in-waiting, tangled lines of succession and men of lowly birth rising to power – sound familiar?
PROMOTED VIDEO
Sport
football
Arts and Entertainment
'The Archers' has an audience of about five million
radioA growing number of listeners are voicing their discontent; so loudly that even the BBC's director-general seems worried
News
i100
Arts and Entertainment
Ready to open the Baftas, rockers Kasabian are also ‘great film fans’
musicExclusive: Rockers promise an explosive opening to the evening
Life and Style
David Bowie by Duffy
fashion
Arts and Entertainment
Hell, yeah: members of the 369th Infantry arrive back in New York
booksWorld War Z author Max Brooks honours WW1's Harlem Hellfighters in new graphic novel
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
News
advertisingVideo: The company that brought you the 'Bud' 'Weis' 'Er' frogs and 'Wasssssup' ads, has something up its sleeve for Sunday's big match
Arts and Entertainment
tv
News
i100
Environment
Dame Vivienne Westwood speaking at a fracking protest outside Parliament on Monday (AP)
environment
Life and Style
tech
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

MBDA UK Ltd: Indirect Procurement Category Manager

Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...

Recruitment Genius: Web Developer - PHP

£16500 - £16640 per annum: Recruitment Genius: This fast growing Finance compa...

Day In a Page

Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee
World War Z author Max Brooks honours WW1's Harlem Hellfighters in new graphic novel

Max Brooks honours Harlem Hellfighters

The author talks about race, legacy and his Will Smith film option to Tim Walker
Why the league system no longer measures up

League system no longer measures up

Jon Coles, former head of standards at the Department of Education, used to be in charge of school performance rankings. He explains how he would reform the system
Valentine's Day cards: 5 best online card shops

Don't leave it to the petrol station: The best online card shops for Valentine's Day

Can't find a card you like on the high street? Try one of these sites for individual, personalised options, whatever your taste
Diego Costa: Devil in blue who upsets defences is a reminder of what Liverpool have lost

Devil in blue Costa is a reminder of what Liverpool have lost

The Reds are desperately missing Luis Suarez, says Ian Herbert
Ashley Giles: 'I'll watch England – but not as a fan'

Ashley Giles: 'I'll watch England – but not as a fan'

Former one-day coach says he will ‘observe’ their World Cup games – but ‘won’t be jumping up and down’
Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

Greece elections

In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

Holocaust Memorial Day

Nazi victims remembered as spectre of prejudice reappears over Europe
Fortitude and the Arctic attraction: Our fascination with the last great wilderness

Magnetic north

The Arctic has always exerted a pull, from Greek myth to new thriller Fortitude. Gerard Gilbert considers what's behind our fascination with the last great wilderness