Mercedes-Benz’s New U.S. Chief Faces Chip Shortage, EV Opportunity

Psillakis must wrangle sales now while serving as point for automaker’s crucial introduction of all-electric EQS platform.

Dimitris Psillakis hit Atlanta as the new head of Mercedes-Benz USA last winter amid turbulence that immediately tested the lessons of his 20 years with Daimler AG and his ability to juggle a major crisis and an unprecedented opportunity at the same time.

In a crucial market for the German automotive giant, Psillakis faced the management challenges of the pandemic for the company’s more than 1,600 U.S.-based employees and more than 380 American dealers as well as 1,200 more employees and about 60 dealers in Canada. He also was being counted on to guide the upcoming introduction of Mercedes-Benz’s crucial new, Tesla-fighting line of all-electric vehicles in the United States.

And then the microchip shortage rose up and bit Mercedes manufacturing and supply-chain operations in the U.S., handing Psillakis the excruciating job of helping dealers manage dwindling inventories at a time when the industry’s strong post-pandemic bounce-back in auto sales meant it was a prime time for the brand to harvest pent-up business.

“It started like a thunderstorm and is continuing being a major heavy rain,” Psillakis told Chief Executive about the chip shortage. “It’s affecting everyone. There’s no single brand or manufacturer that isn’t being affected, more or less. We can make decisions to prioritize production of some models over others, but [the Mercedes-Benz plant in Tuscaloosa, Alabama] is producing hugely demanded and successful products.”

Mercedes’ Alabama-made GLE and GLS lines of large SUVs retail for a suggested $54,000 at the start and can take their monied purchasers well into a six-figure price range, so continuing to churn out these behemoths is absolutely crucial to the company’s U.S. business.

And while Psillakis testified that Mercedes’s output in the U.S. has been less afflicted by the worldwide chip shortage than in some of the company’s other important markets, what’s up to him is working with American and Canadian dealers to ease the pain of the supply pinch—and hold on to as many buyers as possible.

“We’ve never had such low inventories in dealerships,” Psillakis said. “We’re not happy to have to delay deliveries and give longer delivery terms, but we’re managing that as best we can and keeping our fingers crossed.”

More important for the long term, Psillakis also will be ushering in the company’s crucial all-electric vehicles to a U.S. market full of uncertainty about the very future of the technology: Did Tesla bust down a technology wall that suddenly a majority of American luxury-car buyers will crawl over, displaying comfort with purchasing Mercedes-Benz, Audi, Cadillac, Lexus and other EVs?

Mercedes-Benz is betting hugely that the answer is yes. The new EQS sedan is the company’s flagship for an electrified future and the first Mercedes to utilize a platform exclusively designed for EV models. It’s also the first fully electric vehicle from the company’s EQ sub-brand to be offered in the U.S. market and the weapon that Mercedes-Benz finally can count on to ding Tesla.

It’s up to Psillakis to leverage the EQS and subsequent vehicles in the EQ lineup to best advantage for the brand. He joined Daimler in 1992 in Greece and rose through the company in Brazil and then as president of the company’s Canadian operations.

“We have a very strong brand and a brand with a long history in the U.S.,” Psillakis said. “There’s a big network of dealers around the country who are very eager to receive the electric Mercedes-Benz. We say, ‘Now electric has its Mercedes,’ because so far the options for EVs—especially on the top end of the market—have been very limited. We have a competitive proposal for the market and a desirable product.”

A huge part of Psillakis’s task these days is working with Mercedes’s North American dealers to optimize the launch and to be ready to sell and service a stream of other new models on the EQ platform over the next few years, including some that will be built at Tuscaloosa.

“We’re preparing them mentally, and with skills, in terms of sales consultants and customer-facing functions as well as the right skills on the technology side to maintain and support these vehicles,” Psillakis said. “We’re also working with them on their infrastructure, including the necessary charging stations, display areas and whatever we do from a marketing point of view.”

This year already has been a time of transition for Mercedes’ dealer base because of how the pandemic disrupted traditional automotive retailing and became an accelerant to online relationships between dealers and customers.

“We’re dealing with a premium brand, and a premium brand means a premium brand experience,” Psillakis said. “We want to be able to offer it physically, so customers can check vehicles and do negotiations and receive product. But also we have customers who are scared by the pandemic or are busy or prefer to be totally online, and they can do everything through our online sales channel.”

Given Mercedes-Benz’s huge installed base of gasoline-powered vehicles in the U.S., Psillakis said that brand and its dealers also are aware they need to continue to service that base even as the EV revolution seems to take hold in the American market.

“We’re bullish about the EV option coming in, but at the same time we’re continuing to support all Mercedes-Benz internal-combustion engines and vehicles,” he said. “As EVs go to five, seven, 10 percent, we’ll still be there for our full range of vehicles.”