Mercedes-Benz USA CEO: ‘The semiconductor crunch is continuing into 2022’

Mercedes-Benz USA CEO and Head of Marketing and Sales in North America Dimitris Psillakis speaks to Yahoo Finance Live about how the chip shortage is affecting the auto industry, the increase in popularity of electric vehicles, and the company's second-quarter sales.

Video Transcript

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- Supply chain clogs have slowed global auto sales and trimmed inventories, but high prices are keeping the good times rolling at many automakers. Let's bring in Pras Subramanian to break down all of this for us along with Dimitris Psillakis, the Mercedes-Benz USA CEO Head of Marketing and Sales for North America. Good to see you, sir. So how did those shortages impact your Q2 sales, and are you seeing waning demand?

DIMITRIS PSILLAKIS: Good afternoon to you. I would say that the semiconductor crunch is continuing also in 2022, but what we could observe in the second-quarter was a more stable supply always on a lower level. So that helps us stabilize our supply to our dealers and supply to the market, which gave us a better Q2 than Q1 earlier this year.

PRAS SUBRAMANIAN: Hey Dimitris, Pras here. So earlier this year Mercedes globally revealed their new long-term strategy focusing on the top end core luxury. What does it mean exactly for the US division and for US customers?

DIMITRIS PSILLAKIS: I would say that's a luxury strategy by our brand fits perfect with the US markets. The US market is on the top end heavy. V8 engines, top SUVs, and Mercedes-Benz can supply this segment with top products.

We have our factory in Tuscaloosa which has been running very stable in the last month, supplying GLE, GLS, and soon to come out, as of September, the new fully electric EQS SUV. So it helps keep the sales on a high level and have a Q2 better, stronger than Q1 this year.

PRAS SUBRAMANIAN: You mentioned electric EQS on sale this year doing quite well, almost there with the-- actually with the S-class itself. You mentioned also Tuscaloosa where you're going to be building some of these electric SUVs. What can you tell us about consumer sort of demand or consumer appetite for these electric SUVs?

DIMITRIS PSILLAKIS: I would say it's high. As you just said, we launched the EQS, our electric vehicle sedan, at the end of last year. We have had a great seven year run-- seven months run with over 4,000 units being sold to US customers.

And the demand already for our EQS SUV, as I said is coming September, it's pretty high. Maybe that's also supported a little bit by the high gasoline prices making the electric vehicles much more competitive I would say at the moment, from a consumption point of view.

- Dimitris, and do you think that the record high gas prices that we've seen over the last couple of months and the fact that it still remains high in the US-- I guess, how much-- to what degree do you see this speeding up EV adoption?

DIMITRIS PSILLAKIS: We see a higher demand for electric vehicles. We see customers obviously asking details and the fact that we as a brand also, after launching our top end vehicle in the electric segment, which is the EQS, launching now in the next month the EQB, which is our entry model let's say, in the electric vehicle segment with a price of around $55,000, is giving us a big span of customers which can be covered.

I mean, we go-- we start with sedan, we go now to the SUV EQB. We come with the EQS SUV, so a full range of products fitting taste but also functionality.

PRAS SUBRAMANIAN: Hey Dimitris, we've seen the car buying boom here affect the luxury cars and took a lot of those cars being sold during the pandemic and post pandemic. Do you see that trend continuing here in the short term?

DIMITRIS PSILLAKIS: We see the demand being pretty high, especially in the segment that we're operating, the premium segment, the luxury segments. We see the demand staying and remaining high despite let's say the inflation or the weakening economy. Don't forget that on our end also we have launched many new and attractive products.

C-class was launched in May. We have the EQS. We have the G-class. We have new cars. The SL for example, is launched early next month. So new products, attractive, good design, a lot of technology in them helps keep the demands on a high level.

- Dimitris Psillakis of Mercedes-Benz USA CEO, thanks so much for joining us. And of course, our thanks to Pras Subramanian as well.