Iraq Looks Good to Daimler

2008 Mercedes-Benz Actros
By Brendan Moore

05.12.2008

Does Daimler know something the rest of us don’t know?

Daimler has announced that they will open an office in Iraq this year. The office will be in Baghdad and Daimler stresses that it will be purely a representative office at first, but is also not coy about why they’re opening an office there. Daimler says that they see a return to normal conditions in Iraq on the horizon and they want to be well-positioned in-country when that happens.

Daimler already has solid ties to the Middle East, thanks to its largest shareholder at 7.2%, the Kuwait Investment Authority, and its healthy and growing business in the region, which includes headquarters in Dubai.

Ursula Mertzig-Stein, a Daimler spokesperson, commented that the company sees strong potential in the country for its truck division. Daimler is the largest producer of medium and heavy commercial trucks in the world. “We think the greatest demand will be for our commercial vehicles there,” Mertzig-Stein said. “Daimler intends to establish a corporate representative office in Iraq. We know that the Iraqi government will welcome this move, also because it demonstrates our confidence in the country’s advancing normalization.”

Of course, the executives at Daimler read the paper and watch CNN like the rest of us, so they are acutely aware of the potential problems in terms of doing any sort of business in Iraq. The company’s managers have taken part in meetings with U.S. Army personnel and Iraqi government officials with an eye towards assessing all the current negative and positive aspects of setting up an office in Baghdad. With that in mind, Daimler is quite unlikely to start putting up dealerships in Iraq anytime soon, or to bring their passenger-car line into the country. Whatever potential is in Iraq, Daimler thinks that potential will be all trucks for the foreseeable future.

Daimler has been in the news before recently regarding Iraq; in 2005, subsequent to the independent inquiry into corrupt business dealings with Saddam Hussein’s regime, Daimler was on the receiving end of some very negative press. The inquiry, which ended up singling out over 2,000 companies that were involved in the United Nations’ oil-for-food program, accused Daimler of giving kickbacks to the Saddam Hussein-led Iraqi government to secure government supply contracts. Since Daimler still owned Chrysler, the American auto manufacturer at the time, the incident proved to be doubly embarrassing to the German company.

The current move by Daimler is interesting on several levels. It represents Daimler’s desire to maintain a high profile in the Middle East, a region it believes to be a future high-growth area, and it also can be portrayed as affirmation from an independent third-party outside of the military/political orbit that the situation on the ground in Iraq is improving, and will continue to do so.

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Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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2 Comments

  1. Maybe they have better intelligence than the U.S. Army.

  2. They’re going to need some big trucks when the economy comes back. They are pumping a lot of oil out of Iraq now, so it’s only a matter of time.

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