Mercedes-Benz of N. America President & CEO Addresses 1999 NADA

6 February 1999

            Jackson - a Former Dealer - Outlines the Future Forces
                       Of Tomorrow's Retail Environment

    SAN FRANCISCO, Feb. 6 -- Mercedes-Benz of North America, Inc.
(MBNA) president and CEO Mike Jackson delivered the keynote address at the
opening session of the 1999 National Automobile Dealers Association (NADA)
Convention in San Francisco, California.  NADA represents more than 19,500
franchised new-car and truck dealers holding nearly 40,000 separate
franchises, domestic and import.
    "There is a fundamental change occurring in today's marketplace -- a
remarkable change in how the retail automotive business will occur in
America," said Jackson.  "The coming of age of the Internet and E-commerce as
market enablers combined with the new phenomena of publicly held retail chains
and the potential of their processes is changing the dynamic of the automotive
retail environment.  The old rules don't apply anymore and, for many of us,
the circumstances call for very aggressive, progressive action.  Such
initiative must be rooted in true partnership and a holistic approach between
manufacturers and their retail partners."
    Jackson described the strategic foundation that MBNA has laid out over the
past six years (which has led the company to a tripling of its annual sales
volume to over 170,000) through specific product marketing, customer care,
communications and retail strategies.
    With this foundation in place, Jackson said that MBNA and its retail
partners have identified a series of "Future Retail Assumptions" that will
come to define the way business is conducted in the luxury segment.  "We don't
use 'assumption' in the sense of supposition, but rather in the context of
taking on new ways of doing business -- taking control of our destiny -- into
the next millennium.  Some may seem simple, some controversial but, taken as a
whole, we firmly believe that this will define a whole new retail paradigm
which starts within the luxury market but potentially has broader
implications," Jackson said.

    Jackson delineated the "Future Retail Assumptions" as follows:

    -- Change is inevitable.  "The days of doing business a certain way in
       automotive retail are over.  We're in an unbelievably dynamic situation
       here in the United States.  It is the successful companies here in the
       U.S. that have not only the skill to manage, but the foresight to
       embrace change.  Change brings opportunity, if it's managed properly.
       Our industry certainly offers a continual opportunity to grow, it also
       offers a continual opportunity to decline -- it all depends on how well
       you master change."

    -- Manufacturer control of the retail system enables change to be used to
       an advantage.  "We are absolutely committed to keeping control of the
       retailing of our products within the Mercedes-Benz retail network.
       Toward that end, it is a priority for us to assist our retailers in
       harnessing the power of new technology rather than becoming victims of
       it.  Our retail partners are the best competitive advantage we have
       because they provide a variety of services and support -- an added
       value -- that can't be obtained anywhere else or by any other means."

    -- All actions must be developed in line with a varied and rapidly
       changing legal environment.  "That sounds like a simple statement, but
       we're dealing with 50 states and different franchise laws in every
       state which therefore will continue to create unique challenges for our
       industry moving forward.  The same legal system which was designed to
       address the dealer/manufacturer interface cannot be relied upon to
       protect the individual retailer from the fundamental change and new
       challenge at the retail level."

    -- Strong working relationships must be forged with entrepreneurial retail
       partners.  "We want to work with entrepreneurial partners at retail.
       We don't want to go into retail ourselves, it's not our core skill.
       And we don't want to contract it out to some big publicly held entity.
       We firmly believe that the right entrepreneurial partners with the
       right management, the right capitalization and the right location at
       retail give us a competitive advantage that cannot be obtained anywhere
       else."

    -- The retail focus must shift from intrabrand to interbrand competition.
       "If our entrepreneurial partners are spending 80 to 90 percent of their
       energy trying to beat their own colleagues across town, that's not
       added value, that's not added business.  We want to gradually change
       the focus to really competing with those who want to take business away
       from us."

    -- The new retail model must be financially rewarding and cost effective
       for all.  "Whatever changes we make, whatever new ways we go, they must
       be financially rewarding.  We have all made significant investments in
       capital, in time, in energy, and in talent.  Those investments should
       be emotionally rewarding, but at the end of the day, they've got to be
       financially rewarding for both sides, wholesale and retail."

    -- Manufacturers should provide the technology for their retail
       environment.  "The Internet is absolutely going to be part of the
       future of commerce.  But what consumers are ultimately looking for is
       knowledge.  We already have information overload, so the challenge will
       be how do you convey that knowledge on the customer's terms?  If we
       want to be the provider of knowledge, then we must create and manage
       the platform ourselves upon which we all, in real time, can provide our
       customers and prospects with knowledge in a very convenient and
       effective way."

    -- Stimulate demand, manage supply.  "The foundation of this industry
       remains in strong products.  This business is all about product, and
       managing the associated supply chain as appropriate is key.  In so
       doing, high inventory costs, discounts, programs and other
       brand-eroding tactics give way to low inventory carrying costs, little
       discounting at retail, high gross profits, record volumes and very
       successful net profits."

    -- Provide the right product in the right place at the right time.  "We
       can all do a much better job of having the right car or truck at the
       right place at the right time.  We all have complex distribution
       processes with products coming from around the world, but we know we
       can do it in a much more efficient and effective way in the future.
       Future technology and our new product marketing strategy can create
       opportunities through the distribution chain that were previously never
       even dreamed of."

    -- Automotive retail is an emotional experience requiring contact with
       people and product.  "Of course, we have to take care of the rational
       side of the equation, but we are truly in the emotion business.  And we
       have to be experts at managing the emotions that take place in
       relationships.  Commodities are purchased purely on price or access --
       ours must be a business based on mastering passion.  We need to
       systematically manage relationships and expectations that are
       successful, win-win, and build for a future."

    -- We are in the relationship business.  "We need the skill and the
       capability to systematically manage the entire relationship and the
       entire cycle of the relationship from how we create awareness, to
       consideration, to what clients experience, to why they own the product,
       to the reconsideration.  Our goal must be to continually ensure
       relevancy and add value while creating advocates for our brand, those
       who bring others to Mercedes-Benz with their infectious enthusiasm."

    -- Negotiation must be minimized through credible processes and policies.
       "When you start a relationship at the retail level, the first thing you
       have to do is negotiate price.  That is inherently an adversarial
       process.  Customers are very skilled at it and so are we.  Just think
       if we could engineer a relationship with credible policies and
       processes that are at the same time motivating and rewarding.  For
       that, we need to create transparency at the retail level.  For
       example, customers have more information than ever before on pricing.
       This new empowered customer must know that the price -- whether it be a
       new vehicle, pre-owned, parts or accessories -- is the same wherever he
       or she goes and negotiation is unnecessary because the value is
       inherently there.  In that moment, we've opened the door to start the
       relationship in a whole new way."

    Jackson concluded his remarks by emphasizing:  "Most importantly, there
has never really been a better time -- or a greater need -- for the
partnership between wholesale and retail, dealer and manufacturer.  That
partnership, however, must be rooted in the spirit of teamwork, trust,
agility, and utmost profitability to ensure that both entities are mutually
prepared for the magnitude of change and the speed of change that will now and
forever mark our industry."
    Jackson joined Cherry Hill Motors in New Jersey as a service technician in
1971.  Over the next 18 years he broadened his knowledge of the retail auto
business with several auto dealerships, as well as working five years for MBNA
as a district manager and field service manager in the company's Washington,
D.C. region.  Prior to coming to corporate headquarters in Montvale, N.J., in
July 1990 as senior vice president, Jackson was executive vice president,
general manager and partner in Euro Motorcars, Bethesda, Maryland.  He was
named president, Mercedes-Benz of North America in March 1997, and assumed the
additional responsibility of chief executive officer in October 1998.  He is
the first American to be so named.