Mercedes-Benz Celebrates 50 Years in Australia
8th August, 2008
The year 2008 marks the 50th anniversary of the establishment of Mercedes-Benz in Australia.
Since its July 1958 founding, Mercedes-Benz Australia has grown from a tiny antipodean outpost to the world's 10th largest Mercedes market.
In 1961 the brand sold 1,481 cars and 335 trucks. This year, the company plans to sell more than 30,000 vehicles from its impressive range of premium cars, trucks, vans and buses.
“This is an important milestone in our company’s rich history,” said Wolfgang D. Schrempp, President and CEO of Mercedes-Benz Australia/Pacific.
“The last fifty years has seen not only an impressive catalogue of iconic vehicles come from our company but the establishment of a successful enterprise serving so many important customers in this part of the world."
“From heavy trucks and light vans through to the premium luxury cars the three-pointed star is famous for, Mercedes-Benz has proudly offered many solutions to the needs of the Australian market,” said Schrempp.
The following details the journey taken by the inventor of the automobile in Australia’s car industry.
THE 1950s – A COLLABORATIVE VISION
The corporate journey taken by Mercedes-Benz began with the 30th July, 1958, set-up of Mercedes-Benz Australia Pty Ltd by Germany’s Daimler Benz AG and Australia’s Standard Motor Products.
Think of Mercedes-Benz today and images of a sleek car cruising along a city street or a winding coastal road spring to mind. But when the company was founded here 50 years ago, in an economy 'riding on the sheep’s back' and major infrastructure projects, the brand was being largely experienced by farmers and truck drivers. The first national dealers meeting, in 1954, were for truck dealers.
From 1953, importing a car from overseas required an import licence from Canberra. The imported car market was small. Between 1952 and 1955 an average of only 200 Mercedes cars and 50 trucks were sold each year.
World War II had only ended in 1945; rationing didn’t really end until 1948. By 1955 the only prestige German cars on the market, apart from Mercedes-Benz and Porsches, were from Borgward. Other German marques such as DKW, Goggomobil, Goliath, Lloyd, NSU and Opel were available but in small numbers.
Mercedes-Benz cars were competing with Jaguars and Rovers from England and with the eye-boggling Chevrolets, Pontiacs and Dodges from the US.
But Australians have always loved motor sports where Mercedes was a star overseas, and admired beautiful Mercedes car models like the 1954 'Gullwing' and Daimler-Benz (DBAG) executive Willy Zeh, who'd come to Melbourne in the early 50s, saw the market potential for the brand down under.
Zeh persuaded DBAG's Stuttgart headquarters to set up a central office here, in what some would regard as our buyers heartland, in suburban Camberwell in Melbourne's eastern suburbs. The company set up offices in 1955, where the vision for the brand's Australian growth emerged from the local DBAG team. The team was led from 1958 by Dr Werner Friedlander, and inspired by some keen car dealers.
Dietmar Haug, a senior MB executive in Australia (1960–2000) says Friedlander was “a thinking person, and good with figures” who pioneered the idea of bringing car parts to Australia for assembly. But where?
Enter Allan Hodges Cheetham, veteran of two world wars, retired CEO of Standard Motor Products (Standard) and a Leongatha, Victoria, sheep farmer. Having met Cheetham through a Standard executive, Friedlander retained him as an adviser. And, as luck would have it, Cheetham’s former company had excess capacity at its Port Melbourne plant where it made Vanguards, Triumphs and Fiat tractors.
Cheetham saw the sense of assembling MB vehicles and selling them through Standard’s wholesale and retail operations. He and a Standard sales executive, Keith Horner – later to be the famously aggressive sales boss of Ford Australia – went to Germany and secured the rights to assemble and distribute the three-pointed star in Australia.
That deal with Stuttgart led to the founding of Mercedes-Benz Australia Pty Ltd (MBAU) on 30th July, 1958, two-thirds owned by Standard and one-third by DBAG. The company was now up and running.
Its aim, said the press statement, was to “in a step-by-step manner assemble the Mercedes-Benz vehicle model range, with an emphasis on heavy trucks … and promote the export possibilities to countries of the South Pacific Region”.
In 1959 Standard changed its name to Australian Motor Industries (AMI), German technicians arrived to train workers to assemble MB cars and Cheetham was appointed MBAU Managing Director. On 12th February, 1959, the first MB car – a 220 S sedan – came off the AMI line into the eager arms of Victorian Premier Henry Bolte who was photographed holding its three-pointed star.
The brand’s former limited distribution through independent distributors was set to expand, leveraging off AMI’s network.
Daimler-Benz took full control of MBAU. Cheetham stopped local car assembly and moved to full imports. The joint venture between AMI (formerly Standard) and DBAG ended after three years when Australia’s 'credit squeeze' hit AMI hard. In July 1961 AMI sold its MBAU stake to DBAG.
Cheetham appointed 10 MB distributors and, with dealer input, established the capital city flagships – Lanes Motors in Melbourne (December 1961) and Sydney’s York Motors (December 1962). In 1964 he appointed his assistant, Dietmar Haug, as Car Sales Manager.
Until 1965 MBAU continued assembling cars at AMI in Port Melbourne. Between 1959 and 1965 it turned out almost 7,500 MB cars – 190s and 220s with local seats and trim, batteries, tyres and paint – blue, green, black and three shades of grey.
MBAU’s first service instructor at the AMI plant, now 90-year-old Jack Mawdsley recalls Cheetham as “a tough boss”. Dietmar Haug says three qualities underpinned Cheetham’s success.
“First, he was very thorough and hands-on,” Haug says. “When we were assembling cars he had his own man on the production line, verifying that every car was spot on. He’d look at every payment that came in and sign every cheque that went out.
“Secondly, he was a great marketing guy who developed the system of distributors in every state. Thirdly, he had great business sense. One example was his decision to stop assembling cars here.”
That decision was made in 1964, when AMI planned to survive by assembling Toyotas and the federal government tightened local content rules, and production was wound down in 1965. “It was the right decision because the government’s local content laws demanded Australian-made product in manufacturing – meaning we couldn’t maintain the integrity of our product,” Haug says.
The ensuing imports were remarkable, including the 230 SL 'pagoda roof' Mercedes launched here in 1964. Commercial vehicles were boosted by the 1965 arrival of the legendary LS 1418 truck, followed by the first MB bus in 1969.
In 1962 truck assembly moved from AMI to a nearby Lanes Motors facility, and in 1969, to Volkswagen’s Clayton factory. By 1965 MBAU had 22 people at head office, now at BP House in St Kilda Road.
In the mid 60s, with Mercedes-Benz's markets growing and its dealer network expanding the company moved its spare parts from Port Melbourne to a Gardenvale warehouse.
Aware of future growth potential, in late 1969 Cheetham bought MBAU's first land in the new Mulgrave industrial estate off Springvale Road in Glen Waverley (Mulgrave). Building immediately began on a national parts warehouse, service workshop and school and administration building.
Hans von Brockhusen succeeded Cheetham, brought the company closer to its dealers and the media, and started truck assembly at Mulgrave. MBAU staff started moving to Mulgrave in July 1970. Six months later – unaware that 30 years later head office would need to house Chrysler Australia as well – Cheetham bought adjoining land.
In 1970 an unprecedented 1,038 commercial vehicles were sold and MBAU started expanding its national dealer and servicing network to meet truck fleet needs.
Hans von Brockhusen took over from Cheetham in 1972 after more than a decade in North America. 'Brocky' wanted to increase the factory’s control over MB distribution and improve the company’s media relations. He achieved both objectives well before handing over to Bernt Schlickum in 1984.
A tall German aristocrat, army conscript and Russian prisoner of war, Brocky has immense charm. Motoring writers discovered this at the company’s first national press launch – for the W123 280 E range – at Thredbo in June 1973. The 280 E was followed by a range that led the Australian luxury car market and had impressive safety features.
In 1977 von Brockhusen bought more land at Mulgrave for a truck assembly plant and new administration building. The then Prime Minister Malcolm Fraser opened the plant in February 1978 and lunched with the workers.
Brocky also used the brand’s stellar racing history to attract public attention that year by bringing Grand Prix world champion Juan Manuel Fangio to Australia to celebrate the 50th anniversary of the first Australian Grand Prix.
MBAU won the decade’s largest federal government contract. Bernt Schlickum succeeded von Brockhusen. Freightliner trucks arrived.
In 1981 MBAU achieved nationwide spare parts computerisation. But the real focus was front of stage, with Popemobiles, major visits by classic race cars and a huge government defence contract.
On 15th October, 1981, the federal government announced its $67 million purchase of 1,295 locally assembled Unimogs for the Defence Department – the largest military purchase of the decade.
Another triumph was the arrival of MB cars with the new anti-lock braking system (ABS) – standard for the first time on the 380 SL and optional on the S-Class in 1980 – and new-era driver airbags, which became an option in all MB cars from 1981.
In 1984, von Brockhusen handed over to Bernt Schlickum at the first annual National Dealer’s Conference – an event Brocky believed marked his success in bringing the factory closer to the dealers – and retired in Melbourne.
Schlickum – who'd fled his Iran sales posting after the 1979 Iranian revolution – arrived in Melbourne in 1981 as Brocky’s Deputy Managing Director. He'd been here for two years in the early '70s studying the entrails of this relatively small but important export market.
The year 1986 saw Fangio's return and the Sydney arrival of the two 'Popemobiles', based on the 230 GE (which had been handed over to the Pope in Rome by the company's current CEO, Wolfgang Schrempp when he was posted there), for John Paul II's visit.
But it wasn’t always easy. In 1986, the federal government introduced a luxury car tax above a set retail threshold, coupled with Fringe Benefits Tax on company cars, making life difficult for new Mercedes-Benz models.
In 1989 Schlickum celebrated the achievement of one his goals when the first of the non-Mercedes-Benz trucks, the US Freightliner FLC 112, rolled off the Mulgrave line.
Mercedes-Benz changed its nomenclature. MBAU stopped local truck assembly and introduced vans. Schlickum retired. DBAG merged with Chrysler of the US.
The 1990s opened with Australia slipping into the recession that the then-Labor Treasurer Paul Keating said “was the recession we had to have” and a temporary but threatening luxury tax crisis.
With the federal government beginning to roll back import duty by 2.5 per cent a year under the Button plan in the mid 80s, Mercedes-Benz stopped local truck assembly, moving to fully imported trucks which, by the end of the decade, included the award-winning MB Actros along with American Freightliners and Sterlings.
This decade Mercedes changed its model nomenclature so that letters preceded numerals, which made more sense given the enormous array of models that was to follow. For example, the 320E became the E 320 and the ‘E-Class’ was born.
These included the second-generation E-Class range with its distinctive new headlights, the revolutionary A-Class, and the M-Class, the world’s most agile Sports Utility Vehicle.
In 1997 MBAU changed its name to Daimler-Benz Australia/Pacific (DBAuP) – an umbrella for MB, SsangYong, Freightliner, Sterling and its finance arm – and 4th December was the official opening of the company's new $8 million Mulgrave headquarters.
On the car front, Schlickum was securing partnerships with distributors and dealers in every state by taking equity in them, preferably 51 per cent stakes, and increasing dealer standards. Meanwhile, in 1998, the new Vito and Sprinter vans arrived.
With the press in Germany, DBAG dropped a bombshell – its $A43 billion global merger with the US-based Chrysler, spearheaded by DBAG’s then-Chairman Jürgen Schrempp. The rumour had been around but the press was skeptical because the companies had such completely different corporate cultures. DBAG wanted a foothold in the lucrative US market; the struggling US Chrysler was looking for help. Together as DaimlerChrysler they became the world's fifth largest automotive company.
In Australia in 1998 Roman Fischer became inaugural MD of the DaimlerChrysler Australia/Pacific (DCAuP) Mercedes Car Group, reporting to Schlickum who became the inaugural DCAuP CEO. On 4th January, 1999, MBAU officially changed its name to DCAuP.
The DBAG/Chrysler merger ended. Mercedes sales continued to grow.
MBAU staff, just comfortable in their Daimler-Benz Australia/Pacific (DBAuP) seats, now faced the transition to DCAuP. Schlickum prepared to build an extension at Mulgrave to house the Chrysler people by March 2000 and tackle the enormous task of integrating the two companies' IT, market research, parts distribution and accounting systems.
The normal DBAG retiring age was 60, but Schlickum asked for another 18 months to bed down the massive changes. He retired on New Year’s Eve, 2000, to move back to Berlin, succeeded by Roman Fischer as DCAuP CEO in 2001. Fisher took over just as DCAuP launched its high-tech national parts distribution warehouse in Laverton, Victoria.
The car front was marked by a plethora of new models, model facelifts and range expansion. Highlights included the 'Smart' brand, and the first CLS, R-Class and B-Class.
Meanwhile, the integration of DBAG and Chrysler continued. Ernst Lieb succeeded Fisher, who returned to Stuttgart in 2003, and says his greatest challenge was “integrating all brands to create a single DaimlerChrysler company with a unified spirit and joint set of goals”.
Lieb handed over to Wolfgang Schrempp and moved to run North America in 2006. Although, as Lieb says, “we nearly doubled Chrysler sales volume” here, globally the merger unravelled.
On 15th May, 2007, DBAG announced its sale of Chrysler to the private equity group, Cerberus. Later that year, the DCAuP name in Australia changed to Mercedes-Benz Australia/Pacific (MBAuP).
The years 2007-08 brought two major MBAuP victories: the company was appointed Preferred Supplier to the Australian Defence Force, negotiating to supply and maintain 1,100 G-Class vehicles and the company won the huge Australia Post contract (from the incumbent of more than 20 years) to replace all of its iconic red mail vans with Mercedes-Benz’s award-winning Sprinters.
These wins were a powerful reminder of just how much the brand's pushing of the technology envelope has changed the world since Karl Benz and Gottlieb Daimler got together all those years ago, and of just how entrenched the three-pointed star has become in this country since the formation of MBAU half a century ago.
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