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INTERVIEW: MERCEDES-BENZ MEXICO
RADEK JELINEK
CEO
Mercedes-Benz México
“I believe that we are living the greatest revolution in the existence of the automobile over the last one hundred thirty years,” says Radek Jelinek, CEO of Mercedes-Benz México. He is optimistic about the
future benefits of technological developments to the Mexican auto sector, from driverless cars to electric vehicles and the growth of internet-based industry entrants.
CHANGE IS AFOOT ...
Like other industry observers, Jelinek forecasts that traditional combustion engines will disappear from cars in the near future, replaced by more efficient technology. “We are moving toward a world where sharing is perhaps going to be more important than owning a vehicle,” he says, pointing to innovations from non-traditional competitors such as Google, Apple, and Tesla. “These are people who hail from the digital world.”
Innovation, however, does not stem solely from newcomers. In order to continue to compete in Mexico’s increasingly vibrant auto sector, major firms are making big changes. Human capital has become the new emphasis, with companies working to introduce transformational ideas to revolutionize the sector from within. At the same time, they seek to hire thought leaders who possess the capability not only to follow instructions but to adapt current ways of working to new regulations and new opportunities.
... BUT CAN MEXICO KEEP UP?
When NAFTA went into effect in 1994, the automotive industry accounted for 1.9 percent of Mexico’s GDP. By 2015, that number had almost doubled to 3.4 percent, according to the Mexican Statistical Institute (INEGI). Could innovation drive growth further? For Jelinek, the answer is cautiously positive. He points to Mexico’s low cost factor and good productivity figures as facilitating elements. “The quality that is produced here is excellent in general. I think that contracts and labor law are relatively flexible and very similar to the United States.” He also acknowledges the young population that has tripled over the last half-century. “There is great potential from these people who want to work and have a positive attitude and energy.”
Although barriers to investor confidence remain, namely the rule of law and security issues, a stronger focus on
Carmakers Accelerate into Innovation
The world’s fourth-largest car exporter, Mexico has seen a two-decade-long boom in the auto industry since the signing of NAFTA. Today, as technological advances revolutionize the sector, does the country have what it takes to keep up?
inclusive growth by the Mexican government is starting to bear fruit, with a record 1.6 million new vehicles sold domestically in 2016, a 19 percent increase over the previous year. Automakers themselves also have a key role to play in driving sophistication in the domestic market. “Companies have to educate their own workers because these become their customers, as well as benefiting the country with respect to social, cultural, and educational development.”
Speaking about the growing market for driverless cars, car-sharing and electric vehicles, Jelinek admits that Mexico still has some way to go until demand is equivalent to that in places such as California and Western Europe. “I believe that in Mexico there are not yet emerging cities where people are informed and where these technologies are as accessible as they could be.” He notes that if Mexico continues along the same path, it could be among the top 10 industrial countries in the world within the next 15 years. “Consciousness will push us there, since that awareness is much more active than ten years ago.” He urges the nation to remain focused on infrastructure and education as key components of future growth.
GOOD NEIGHBORS?
According to the Mexican Automobile Industry Association, more than two-thirds of Mexico’s vehicle exports go directly to the United States. For the new U.S. administration, trade with Mexico is a controversial topic, and the automotive sector is seen as a particular area of contention.
Nonetheless, Jelinek takes a pragmatic view of developments over the border, an attitude he hopes spreads to investors. “The United States election outcome doesn’t surprise me too much, especially when you see the political frustration that we have at the global level. I hope that [trade policy] comes down to actions, to the numbers, and not so much to emotion.” He adds that protectionism is only a short-term solution and never works. “President Trump is an entrepreneur,” and given the complementary and mutual interests of the United States and Mexico, as well as Mexico’s ongoing drive toward modernization, there is still much room for optimism in the auto industry.
Over the past four years, Mexico has attracted US$17 billion in auto-related foreign direct investment, and the sector now employs 730,000 people directly. Before NAFTA, cars imported by the United States from Mexico had only 5 percent U.S. content; today, that figure is 40 percent.
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