EVERYBODY KNOWS Max Hoffman obtained the first Post WWII Mercedes-Benz distributorship in North America and that he persuaded M-B to build the 300SL and 190SL. Nearly everybody knows Studebaker-Packard was the second North American distributor, and that Daimler-Benz didn’t take on wholly owned distribution of their cars in the US until 1965 through then formed Mercedes-Benz of North America (MBNA). But 1951-1965 were plenty rocky for M-B. Penetrating the American car market has never been easy…witness withdrawals of Citroen, Renault, Fiat, Sterling, Alfa Romeo, MG. The survival rate for American auto manufacturers has been no better; there have been over 2000 brands of car manufactured in the USA since 1900. Americans are tougher customers than sometimes thought.
Many details about 1951 through 1970 in the USA and the reorganization of Mercedes-Benz world-wide, come to us solely through the late M-B executive Heinz Hoppe. With entertaining candor Hoppe describes a life-long career Serving the Star Around the World. He tells of goals, not always compatible with each other, that M-B executives had for the USA… from worries about spreading communism to reaching new customers, …and more selfish goals. Hoppe leaves out precious little which makes the book so special.
Adding to common knowledge about Maximilian Edwin Hoffman, Hoppe writes:
“If Maxie Hoffman’s sales organization had a major flaw it was that it was set up primarily to serve his own interests, and tended to disregard those of his 40 or so sub-agents, the customers and the manufacturer back in Germany. The sub-agents’ main task was to report potential customers to Hoffman, against payment of a rather small commission. Hoffman then collected the main profits: “The customers suffered badly from Hoffman’s sales structure, which landed them with a luxury automobile but offered them no prospects of reliable servicing of it.” “A flood of complaints soon set in, criticizing poor spare parts availability and servicing errors, but also warranty claim problems; all this led to continual disputes between Stuttgart and New York.”
About Carl Kieckhaefer, the famous American manufacturer of Mercury outboard motors, Hoppe: “He wished to collect a new Mercedes 300SL in Stuttgart [alloy-bodied Gullwing #1 incidentally] and I was told to accompany his drive from Stuttgart via Paris to LeHavre, France, where the car was to be shipped to America. Giese [Hoppe’s boss at the time] regarded Kieckhaefer as a possible contract partner like Tata in India for the joint production of passenger cars, and wanted to be sure that his journey went off smoothly.” “The journey was an exciting one, not only because I had never been in the company’s celebrated sport coupe before, but because the distinguished visitor I had been instructed to look after was an eccentric personality, to say the least… Even in the Ritz Hotel’s restaurant in Paris, he had no hesitation in ordering a sandwich during dinner. The head waiter’s face was well worth seeing.”
MBNA’S ROCKY ROAD
Despite Mercury Outboard’s success, including substantial production of engines for inter-island fighting in the Pacific during the war, Mr. Kieckhaefer was vague about an alliance with Daimler-Benz, so Carl F. Giese’s search for a North American assembly facility moved to Quebec for another dubious reception, and later to Curtis-Wright. Giese’s goal seemed to ignore the Board of Management’s reluctance, only ten years after the war, to take on overseas marketing alone. One statement from Giese’s supervisor, Arnold Wychodil: “Daimler-Benz AG earns its money by producing vehicles & supplies them at ex-factory prices to the domestic sales organization & to general agents on the export market.”
Giese did not take this seriously, and directed Hoppe & another early DBNA employee, Walter Bodack, to contact United Aircraft (Pratt & Whitney), General Electric, & Curtis-Wright. They all showed interest in exchanging technology with Daimler-Benz, but had less enthusiasm for auto assembly or marketing. What appeared to be a break-through came when Curtis-Wright acquired Studebaker-Packard. Access to Studebaker-Packard’s 2,500 American dealers lead Curtis-Wright to tell M-B all that was needed was a signature to sell 60,000 cars a year, i.e. two cars per dealer per month x 2500 = 60,000. That Studebaker-Packard’s sales of Mercedes never reached 13,000 cars a year shows the delusion unfolding. Hoppe writes: “Giese, who hoped to build an empire of his own if Curtis-Wright and Mercedes-Benz’ were set up, reported to board members Konecke and Wychodil on Curtis-Wright’s aero engine developments without mentioning the problems of which he was in all probability aware. Even after the contract was signed, Hurley [C-W Chairman] succeeded for quite a long time in preventing DBAG from gaining access to his development department, claiming that military secrecy made this impossible…In view of my persistent opposition, Giese gave me strict instructions to stay out of New York on Saturday before the contract signing, when Konecke, Wychodil, and Klotz were all in the USA.” Hoppe was never-the-less included on the original board of directors.
And, there was still a contract with Max Hoffman to dissolve! Max’s ’56 sales were 3,100 cars. He finally agreed to Studebaker-Packard buying all his unsold cars & spare parts inventory, plus a $2 million settlement, to be paid off via $20 per vehicle sold by S-P. Payments were mighty slow!
Reality set in quickly, when only 200 of Studebaker-Packard’s dealers were contracted for dealerships… a figure that never climbed over 430. Worse, these dealers had no idea how to sell cars for twice the price of a Cadillac, nor how to service them. Packard dealers helped some. After initially filling dealer inventories for ’57 Giese and S-P invoked a sales results black-out. Stuttgart knew they’d delivered less than 1/10th of the 60,000 annual target by Nov. of ’57. Giese prohibited any reports to Germany, except through him. It eventually came to heated personal insults exchanged between Hoppe & Giese.
Actual results for ’57: 3,150 cars sold, and worse, 3,500 cars in the USA unsold. Adding to this, Studebaker-Packard itself was nearly bankrupt, meaning some of D-B’s cars teetered on repossession by S-P’s creditors. Giese was fired in February of ’58, and Hoppe was within hours of the same fate when it was recognized that he was prevented from over-ruling his boss, and he remained M-B’s most knowledgeable American representative. Never-the-less Hoppe felt the situation caste him in doubt with some board members for years.
Survivor Heinz Hoppe was faced with making a success of the contract with Studebaker that he had opposed from the beginning. Studebaker dropped Packard after ’58, and introduced several new models including the Avanti, but nothing turned the tide. Hoppe: “I tried repeatedly to persuade Studebaker to invest more in after-sales service, and particularly to set up regional spare parts stores, but those in command at the American company either failed to see the need for this or simply had no funds to tackle the task.”
Both companies expected a meaningful boost from the other, and the synergism never took off. 1964 was dominated by maneuvering, meetings and late night discussions in New York, South Bend and Stuttgart, eventually resulting in a “separation agreement” on December 14th, 1964. It had cost Daimler-Benz nine years of unsatisfactory sales & $3.75 million in settlement fees. On the plus side, as with Hoffman, no court proceedings hampered the transfer, and dealer changeover was carefully planned. MBNA wrote to the 210 best dealers inviting them to negotiate new contracts. 195 accepted. This included new training, trips to Stuttgart for dealers, & marketing analysis within each sales zone. Vehicle Preparation Centers were set up & 52 German mechanics, some with master mechanic status were offered to the new dealers, via three year work permits. Almost all of these men opted to stay in the USA. Some even opened their own dealerships with the help of wealthy customers. Finally things began to pay off. From 1965 to 1970 MBNA’s unit sales climbed from 11,000 to 29,108, a 160% gain, plus 4,000 trucks. That’s what Stuttgart expected, as M-B’s world-wide car deliveries were: 1965:175,813 & 1970: 278,176, also a 160% gain. All four subsequent MBNA presidents, Karlfreid Nordmann, Walter Bodack, Eric Krampe, & current president Michael Bassermann, served on Hoppe’s early staff in the USA, or internationally.
In early 1970 Heinz Hoppe was promoted to DBAG’s Board of Management & returned to Stuttgart. Hoppe proposed Nordmann as his first MBNA successor. Heinz’ new post placed him in charge of all exports, world-wide; activities to 170 different countries! His predecessor, Arnold Wychodil, spoke seven languages, so Hoppe’s “wildcat early years and constant stream of unexpected, often severe, difficulties” [his words] was hardly retired in his new duties.
This new position of influence allowed Hoppe to bring a stronger voice from customers to technical matters. As he tells the story in the first years after WWII technical development was influenced first by motor racing & durability tests for motor sports. In 1955 when he asked Fritz Nallinger, DBAG’s head of development, if automatic transmissions could be offered [beyond the 300c], Nallinger replied: “If Americans want to buy Mercedes, you’ll have to teach them how to use a gear shift!” Hoppe’s view: “Until Nallinger’s retirement the prevailing opinion seemed to be: ‘We know more about cars than our customers, so if we build what we think is right, it will be the best thing for them too.’ Gradually this changed, with growing coordination by foreign sales teams & technical experts in Stuttgart. Hoppe taught his staffs to listen throughout the world, and when necessary bought out private distributors in order to open up communications in both directions.
We suspect Hoppe’s contacts with world leaders during 1970-1982 rivaled American Presidents, due to his massive export contacts. In addition to normal distribution agents many kingdoms & dictatorships entailed inquiries & purchases by heads of state, leading to Hoppe’s role as DBAG’s “foreign minister.” Many of these experiences, from pompous to humorous, are relayed in the book.
Serving the Star Around the World is a rare, open window into the decision making & workings of one of the western world’s most successful public companies. Written as an autobiography, we also learn of Hoppe’s youth in East Prussia (1917-1936), his WWII years, including meeting Wernher von Braun in ’43 (of V-2 & NASA fame, & from ’65 on the Advisory Board of MBNA), Count von Stauffenberg in ’44 (who attempted to assassinate Hitler), and Hitler himself. Ironically it was Hoppe’s superior officer during ’43 & ’44 (at quartermaster headquarters) that invited him to join Daimler-Benz in 1954; none other than Carl Giese. While clearly an insider’s book “featuring” the relatively small fraternity that still controls Daimler-Benz and MBNA, Hoppe’s penchant for unusual incidents reveals a humanistic side that keeps all readers amused and comparing happenings to their own lives. Hoppe’s optimism, attention to detail, customer feedback, and perseverance in the face of diverse bosses; shows a handsome antithesis to sour abdications from the executive suites of the world. Even former Daimler-Benz board chairman Edzard Reuter (in the introduction) applauds this man nick-named “Happy Hoppe” for being able to transform vague instructions into specific tasks, keep them simple, and stick with them when unexpected difficulties and hostilities were encountered.
THIS BOOK was published in 1992 in both English and German. The SLML was surprised to learn then that the book was not marketed in the USA. We were told by the German publisher that only 350 English language copies remained; most copies having already been sold within Mercedes-Benz. The SL Market Letter acquired aportion of these books in the 1990s for sale to subscribers. After 15 years, six unsold copies were discovered in SLML’s archives.
It remains the most detailed account of M-B’s post WW launch in the USA. Mr. Hoppe is unexpectedly candid, wry and humorous. SLML has informed our original purchasers that we will buy their used editions back for $100 to $300. Let the SLML Business Office know you’d like a copy or have one to sell. It is a great bedside reader, as every few pages becomes a short story in themselves. The book sold originally for $49. SLML has decided it will sell four of its remaining six new books (still in their original vacuum sealed wrappers, for $499 each. One of the remaining two will be the prize for a subscriber’s contest later this year.
Description: 325 pages, hardcover, linen cover plus slipcover. Size: 5.5″ x 8.5″ x 1.5″. Well footnoted & illustrated, 110 excellent B & W photographs.