Between them Audi, BMW and Mercedes-Benz sold nearly 555,000 cars in the US last year, maintaining growth for German premium brands in an unforgiving market where quality, reliability and service have to match the perceived prestige of the badge. Hugh Hunston reviews the progress of three Brits who went Stateside to add their polish to Germany’s most coveted auto brands.
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That sustained expansion is largely down to the stewardship of Len Hunt at Audi, Tom Purves at BMW, and Paul Halata at Mercedes-Benz, who have made successful trans-Atlantic transfers from equivalent UK management roles.
Hunt, a 47-year-old Lancastrian and keen water skier, oversees Audi of America from its base in Auburn Hills, Michigan. Since he took over as director at the beginning of 1999, sales have climbed from 47,000 in 1998 to 85,726 units last year.
That growth levelled off in the last two years, illustrating yawning gaps in Audi’s American model portfolio, the most conspicuous being the lack of a contender in the burgeoning sports utility vehicle sector.
While BMW’s X5 and Mercedes’ M-Class, both built in America’s deep south, graze lucratively among the herds of American market SUVs, Audi must wait at least 18 months before joining them. Its contender will be an SUV-cum sports wagon previewed as the chunky Pikes Peak concept car at January’s Detroit show.
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By GlobalDataHunt acknowledged that BMW’s success with Mini could smooth the way for the A3 to cross the Atlantic within two years.
Audi’s management has set Hunt the daunting task of more than doubling North American sales within six years, with a target of 200,000 cars. In tandem he is expanding a network of “exclusive stand-alone” dealerships from 69 to 90 outlets by the end of this year and on to 150.
While acknowledging the US as a predominantly retail market, with fleet sales representing negligible numbers, Hunt has established a small corporate sales department. He explained: “There is corporate business to be had, mainly off the back of global purchasing deals from European companies. We have been negligent in not exploring this territory. Some corporations buy on brand and perceived image to attract and retain staff.” He cites the example of Bombardier, the Toronto-based producer of larger company jets, whose board members drive Audis.
This will not mean any direct dealing from Auburn Hills. Legislation decrees that manufacturers and importers cannot bypass retailers in most states.
One of Hunt’s former UK colleagues pointed to a “zero bullshit factor and an understanding of prestige brands” as core assets he brought to the US. He also led the team which engineered Audi’s emergence from under VW’s shadow in the UK between 1994 and 1999.
“Len excels at people management, bringing staff on side, listening, persuading, and empowering, not bullying. He knows how to delegate and there are no hidden agendas. Where he goes next is the intriguing question?” ponders the ex colleague.
With ambitious sales targets and several niches to be filled, Hunt has unfinished business. Perhaps a move to main board level by the VW Group president in the USA, Gerd Klauss, could ultimately provide the vacancy and answer.
Scot Tom Purves holds a wider brief than Hunt’s. The chairman and CEO of BMW USA carries responsibility for sales, marketing and distribution throughout north, central and south America.
He arrived at the immaculate “Americas'” headquarters in the New York dormitory suburb of Westwood, New Jersey, at roughly the same time as his Audi counterpart moved to Michigan.
For Purves, a time-served Rolls-Royce Motors engineering apprentice (following an Edinburgh public school education), being selected to run this crucial continent for BMW must have seemed a blessed release. As former managing director of BMW’s British operation in 1996 he received what resembled the poisoned chalice in the form of Rover’s sales and marketing directorship.
As a consummate salesman and urbane diplomat Purves stoically maintained at the 1999 Detroit auto show that a revised Land Rover Discovery could co-exist with the upcoming BMW X5.
Since his arrival, BMW’s US group sales volume has soared by 72% to 256,000, aided by last year’s storming Mini debut. The made-in-America ticket attached to the X5 and the Z3 sports car (and now Z4) endorsed that progress.
BMW alone has 30 model variations in its US catalogue, with the compact X3 SUV due to swell the aspirational ranks by the end of this year.
Its calculated gamble with the Mini, the shortest car in North America, has paid dividends, selling 24,500 cars – 4,500 beyond corporate expectations.
In common with Audi’s Hunt, Purves has adjusted to a lack of fleet or business-related deals. Legislation outlaws “differential” pricing between the importer/manufacturer and different dealers.
“We simply don’t do rental business, out of choice and convention,” Purves emphasised, adding: “BMW’s status means that there are a handful of luxury fleets, like airport renters, who buy from our dealers. That is up to them.”
BMW has earned a higher public profile courtesy of its successful motorcycle division. California Highway Patrol’s police patrol fleet is almost totally BMW, which generates business from other public agencies and private buyers alike
While BMW-badged cars enjoyed an 11th successive year of unit increases last year, rising to 232,000 cars, 13,500 motor cycles went to new American owners, the sixth year of two-wheel growth.
As with his Audi counterpart the question is where does Purves progress from this successful staging post? One BMW insider suggested: “The Americas are one step below the board and the last two incumbents ascended to it, including Dr Helmut Panke, our chairman.
“Tom’s move to the USA was a critical test after the performance at Rover marked him down as a communicator and loyalist. Tom is the supreme ambassador.”
The third member of the American-based management transfer trio is Czech-born Paul Halata, president and chief executive of Mercedes-Benz USA since September, 2000.
Mercedes enjoyed a 3% improvement in Stateside sales last year, to 213,200 units, the sixth successive annual record.
As a former head of Canadian operations Halata’s move from the UK to the USA was “something of a homecoming” according to a former aide. Perceived as a highly-focused trouble shooter, he oversaw the post-merger transition to DaimlerChrysler UK before returning west to the three-pointed star’s second largest market after Germany.
During Mercedes’ carefully staged Detroit motor show presentation earlier this year, Halata dropped a baseball pitched to him by Jurgen Hubbert, charismatic head of Mercedes. Halata has scored far too many home runs for Mercedes on both sides of the Atlantic to worry about a theatrical slip.
Holder of a UK passport, Czech-born Halata, a Mercedes veteran for over 30 years, has always relished working in the US market which he describes as: “Ultra competitive and ultra segmented, with New York, Los Angeles not typical of the country, while Chicago, Dallas, Pittsburg and Detroit are different again.”
Underlining the importance of the American built M-Class, which accounts for 20% of total Mercedes US volume, he said: “It was built to American specifications so to all intents and purposes it was an American vehicle. When the next generation comes within two years it will be a different product and philosophy.”
He confirmed that Mercedes in the US was “very much in favour” of importing replacements for the A Class and future Smart models, the latter as urban runabouts, particularly in cabriolet forms, but denied that it was a case of mimicking Mini’s American success.
