By Neil King
Mike Belk, president and CEO of Daimler Middle East & Levant, talks to Arabian Business about why the company’s results are so strong, how it’s pushing the boundaries of technology, and where the automotive industry is heading.
As I arrive at the headquartersof Daimler Middle East & Levant, it’s clear that elegance is in its DNA.
The company is the regional centre of one of the most successful automotive companies the world has ever seen. Indeed, without founders Gottlieb Daimler and Carl Benz, the industry wouldn’t be what it is today, the duo having invented the automobile in 1886.
Now, 130 years later, Daimler is one of the most familiar names on any motoring enthusiast’s lips.
Its star player — Mercedes-Benz — continues to win plaudits with every new launch, while sub-brands AMG, Maybach and Fuso are just some of the car, bus and truck divisions overseen by the parent company.
The head office belies its geographic location, appearing as something of an oasis within the often rough and ready confines of Jebel Ali Free Zone — helped, of course, by the fleet of sparkling Mercedes in the car park.
That elegant demeanour translates into the executive office. As I sit down with Daimler Middle East & Levant’s president and CEO, Mike Belk, he immediately generates a calmness and confidence that is reflected by the brand across the globe.
Belk, who took up the role in 2010, is understandably enthusiastic about the current performance of the company, reeling off an impressive collection of figures and statistics.
“2014 was a great year for us,” he says.
“We grew by just over 22 percent in the region, which outstrips the global growth rate. But I think that it’s a factor that this is a buoyant and strong market here for all manufacturers.
“Within that, we have some key reasons. We had a fantastic reception for the new S-class, which has a strong following here, and the volumes were up by 115 percent last year, so that was clearly a major factor.
“If I look at the SUV, the 4x4 market, we grew by just over 19 percent with the M-class probably the big driver there at 26 percent growth.
“If I look at then the other end of the scale the S-class and A-class, we’ve had a fantastic reception for the model here which outstripped out expectations. A-class growth was over 50 percent last year.”
The growth is impressive, and unsurprising given the hype surrounding high-profile launches such as the S-class, the latest of which arrived in September last year and wowed motoring enthusiasts across the region.
Belk believes 2015 will be a continuation of this upward trajectory, with a series of new models on the horizon, as long as the company doesn’t fall into complacency.
“We’re always looking to improve across the range, and we never sit back on our laurels and just expect the same things to happen,” he says.
“Every year is different. This year we had a host of new models to introduce, so by definition the focus changes. It’s a big year for the SUV market for us, with the new GLE and GLE Coupe, and also the GLC.
“We are replacing many of the high-volume SUVs this year, and that will be a key focus for us to make sure they are communicated well and launched effectively in the region.”
In terms of expansion, the geopolitical challenges and security concerns in some parts of the region don’t appear to have put off Mercedes as it looks to secure firmer footholds across the Middle East with bigger showrooms and wider product ranges.
Belk explains: “We’ve recently established a very strong presence in Kurdistan, which is one of the more challenging and demanding environments at the moment.
“In our existing markets we are making big investment, along with our direct distribution partners, to make sure that the showrooms can fully display the broader range that we now have, which will be broadened further in the next few years.
“By 2020 there will be something like 40 different body styles available, and we’re making sure we have the showroom capacity in terms of size to display those cars to their best.
“You’ll see us developing in each of the major markets a series of flagship showrooms which are not just places to see the car, but also experience the lifestyle that comes with it.”
Anybody familiar with Mercedes will know that cutting-edge technology is a key component to any of its new ranges, and the lifestyle they bring.
Whether it’s drive technologies, improved safety, smart connectivity, autonomous driving or more luxurious in-car comforts, Belk says the company prides itself on being a leader in this arena.
“Mercedes has always had a reputation, particularly with the S-class, of bringing new technologies first to market,” he says.
“We’ve continued that with the current car and that’s why it’s won so many awards because it’s really a rounded performer in every dimension. And those technologies are then successively introduced throughout the range.
“If you were to see the show-cars we presented in Las Vegas at the consumer electronics show, that probably represents where we see the technology story developing. Not just in the area of alternative drivetrains, which has been a theme for every manufacturer over the last few years, but also now the advent of truly autonomous driving — the ability of a car to detect the environment around it and provide a new kind of motoring experience for customers; the ability to stay in touch and connected with the world around them while driving.
“I think you’ll see increasingly that sensing and processing technology to improve the occupants’ safety and to improve the safety of other road users.”
The difficulty that comes with rapid technological advances, however, is that they may be moving faster than many people are ready for.
It’s certainly something that’s the team at Mercedes, and Daimler in general, are aware of.
“We clearly have a huge responsibility to make sure that any technology we bring to the market is thoroughly tested and safe,” says Belk.
“And also that it complies with whatever framework is in place. I think the framework will move rather more slowly that the purely technical ability that we have to bring innovative new products.
“It also raises moral questions. For example, as a driver you clearly have a choice in an accident situation — do you decide to swerve to avoid the accident and potentially hit the car next to you, or do you hit the car in front?
“Now, that presents a challenge with an autonomous car. How should it be programmed? These challenges and questions are relevant in any area that you’re being innovative and developing new technology. We pride ourselves on being at the forefront of all of those debates. Not just a purely technical debate, but debates about how to deploy the technology appropriately.
“At the end of the day it rests with customers’ preferences and choice. We’ll give customers the ability to decide for themselves how they appropriately use this technology.”
The cars’ technological features have contributed to a long list of awards over the years, most recently at the 2014 Middle East Car of the Year Awards, where the Mercedes S-class won overall Car of the Year, as well as Best Luxury Sedan.
For Belk, the awards are of course very welcome, but certainly not the focus for the team.
He says: “An award is external validation of the success of the development process and production process because there’s a huge amount of teamwork, and this continues not with any idea of winning awards but with the idea of making sure the customer gets the very best, and that we match our new ideas and new products to developing aspirations and tastes.
“What drives us is the customer — developing the best customer experience. Not just with the product, but increasingly now through that integration of the online world and the physical world. The boundary between the two is blurring ever more and therefor our focus is on being relevant, being appropriate, and if we get awarded for it, then that’s validation that we are seen as leading, which I think is partly what our customers expect.”
Speaking of customers, our conversation turns to loyalty and behaviour — two things that Belk believes the company should continue to take a leading role in developing.
“The first thing to look at is how satisfied they are with their current car — the purchasing experience and the service experience,” he says.
“That’s very much a local issue. It’s influenced by the local distribution set-up, the quality of our salesmanship, and quality and reliability of the service we provide.
“We have an extensive customer satisfaction survey that we run in the region and we work very closely with the results of that with our distribution partners to continually improve, and we have year-on-year developments in a very positive dimension there.
“So listening to feedback is very important, and being able to do something about it is key.”
The survey isn’t the only customer contact Daimler has in this respect. Belk explains that a lot of primary research and customer focus groups take place to help the company decide which new products and technology to bring to the market. Regular customer clinics also help his team get valuable feedback, as well as offering the chance for Daimler to inform customers.
“It’s also about presenting and stimulating responses by explaining the art of the possible,” says Belk.
“Many people don’t know what the art of the possible is until they see it. So we’re very much guided in that area by our own research and development, as well as the feedback of those ideas. The secret really is making sure that what we bring to the market, and how we package it, is a real benefit to the customer.”
Profiling the region, Belk sees its cultural blend as working in Mercedes’ favour.
He sees the company and the region as being well matched in their dualities, offering tradition and modernity in the same instance.
“I would characterise the region here by being at the same time both traditional and conservative, and on the other hand avant-garde and innovative,” he says.
“It’s an interesting counterpoint to have those two things together. The preponderance towards the desire to have the latest and best technology is very high here, and people always want to be able to show that they are on the front foot in that area.
“Cars for many people represent a way of visibly projecting that. And that does stimulate, along with a high purchasing power here, continuous demand for new products.
“On the traditional side, our E-class, C-class and S-class models are one that have history in people’s families, and therefore we benefit from both the very traditional nature of the market, but also this quest and desire for the latest and the best.”
Another traditional aspect of the company is the familiarity of and confidence in the brand. The Daimler brand — and more specifically the Mercedes band — has long been valued as prestigious, but many historically well-established brands have struggled to keep up with modern trends and technologies.
It’s something that Belk is well aware of, yet his expresses confidence in his company’s ability to go beyond its core product range in order to maintain its high brand standards and reputation.
“A brand lives and evolves, and you have to continually work to bring it to life,” he says. “It’s not just through the products you buy. For example, the success we have on the race track contributes very much to the brand. Mercedes Benz, more than any other brand in the automotive sector, stands for success. Success in terms on racing, success in terms of performance, success in terms of safety, and success in terms of a statement of achievement and being at the pinnacle of one’s aspirations.
“Formula 1 isn’t just about good drivers, it’s very much about the technology which underpins that now; much of which translates directly one-to-one to our road cars, and I think that’s a good example of how the brand is developing.
“Obviously with the importance of performance and speed, particularly in the prestige market here, that racing success underlines not just the heritage, but it’s also very relevant to the cars we market now. AMG, our performance sub-brand, grew by over 25 percent last year, so you can see that at the end of the market we’re actually outgrowing the pace of the growth of the brand.
“So the brand must be nurtured, it has to be developed. Not just physically. We’re working in the virtual world as well, and doing a lot of events. Our website is award-winning and we have a huge social media following here — the biggest of any of the prestige brands by a long way.
“We invest in making ourselves relevant and opening up a discussion, a dialogue, and bringing the brand to life through events. We could also trial the idea of bringing together fashion and lifestyle, cuisine, performing arts, together with cars in the showroom. All these ideas show that we’ve got a lot more to come in terms of bringing the brand to life as a whole experience.”
Today’s brands across the world are effected by numerous social drivers, one of which is the environment and sustainability. With the World Green Economy Summit taking place in Dubai during April, it seems fitting to discuss the work Mercedes and the rest of Daimler is doing in motoring’s environmental space.
“The environmental credentials of Mercedes are very strong,” says Belk.
“We’ve always been at the forefront of making sure that in whatever alternative drivetrain development we have the leading position, whether it’s fuel cells, electric vehicles, hybrids, or more efficient industrial engines.
“We haven’t backed one at the expense of the other, so we’re strongly positioned across the range.”
Taking an innovative stance on the technology, however, doesn’t not necessarily equate to the immediate marketing of greener vehicles, however.
Belk explains that while the company is ready to roll out a range of more environmentally-aware products, they won’t be able to do so until certain circumstances and desires change.
“We have in the bank almost a solution for every eventuality,” he says.
“But the decisions and choices are often driven by legislative developments, which either impact on people’s personal tax situation, or penalise a manufacturer if they don’t have a CO2 fleet average at a certain level.
“That kind of framework is not in place to any extent here at the moment, so I don’t think we’re any different to any other manufacturer in as much as we have the technologies, but there has to be a latent demand from customers or by legislation to bring those to market.
“We’re ready to respond and react at any time.”
If you get the sense that operations at Daimler Middle East and Levant run with military precision, then you would be closer to the truth than you may realise.
Before joining the automotive industry, Belk studied at the Royal Military College of Science, and completed his officer training at England’s prestigious Royal Military Academy, Sandhurst.
These formative learning experiences, must have had an effect on his leadership capabilities, I suggest: something Belk confirms.
He says: “Running an organisation is about several things, but a lot of it is making sure there’s a focus on products, a focus on process, and a focus on people.
“Any very structured development experience, whether it be a business school, or the military, is part of making sure that you can develop a management and leadership style that encompasses all of those things. I wouldn’t say that there’s anything that translates one-to-one exactly, but the ability to multi-task and keep abreast of all those elements is something that is important in delivering an objective, and that’s what we try to do here.
“We try to keep focused and make sure that while there’s an awareness of where we want to go, how we get there is flexible. It’s that balance of long-term strategic, short-term tactical. If people understand what the objective is, then delegating authority and autonomy to make decisions on a lower-level is quite key, and I think maybe that comes through part of my military background.”
In the coming weeks, however, the sustainability of his systems and strategies will be put to the test without his guiding hand. After half a decade at the helm of regional operations, having steered it into pole-position on various fronts, Belk is due to head back to the UK for a new challenge within the group.
“After five really enjoyable and fantastic years here in the region, I move back to the UK on 1 May to head up the truck business there,” he explains.
“I’m obviously very much looking forward to the challenge, but when you spend any amount of time in a region, you leave a little bit of your heart and soul there.
“I will be in some ways sad to leave a place where I have made close friends and worked with lots of fantastic colleagues.”