Mercedes, Don't Move Without Ziv-Av

Yoav Kaveh
Yoav Kaveh

It happened in 1991 during a visit to the Mercedes factory in Stuttgart. A genial man with an equally-impressive mustache and gut led us around. He presented the production line of the new Mercedes S-Class, the flagship vehicle of the German manufacturer, to a small group of tourists and visitors. I watched one worker test the latches on the trunks. One of the cars was being obstinate, so the worker slammed the lid of the trunk closed, only for it to pop open once again. In the end, he lost his cool, took a hammer and, in one blow, shattered not only the latch, but also the Mercedes myth that I had built up in my mind.

At the end of the tour, I asked the guide: How much does it cost you to make a car? Fortunately for me, the hammer was no longer within reach. The guide was stunned by my impudent question. He pulled a face and answered that even a baker would never divulge how much it costs him to make bread.

Fast forward to 2006. I no longer need favors from some hirsute tour guide. I know exactly how much it costs Mercedes to produce all of their models. The Mercedes A-Class, for example, costs $9.20 per kilo; in other words, $11,400 for the entire car, which weights 1,240 kilograms. This, of course, is the manufacturer's price, and does not include marketing, distribution and cargo costs. The price in Germany of the basic model is around $18,000.

How do I know? Because Amir Ziv-Av told me. How does he know? Well, that's a little more complicated. Now we have to rewind to the 1970s. Ziv-Av, a young mechanical engineering student at Tel-Aviv University, was the road tester for Ma'ariv newspaper. He had a regular route he would take when testing a car: From Tel Aviv to Rosh Ha'ayin and from there, via the infamous Quarry Road (Route 444, which runs south toward Ben Shemen Forest.) Despite the fact that he is a gentle soul, Ziv-Av showed no mercy. He accelerated ruthlessly, braked with force and took corners far too sharply.

"At the time, the best cars were the Peugeot 504, the first generation Golf and the Audi 80," he reminisces now. "The worst of the bunch was the Lancia Beta."

Ziv-Av also studied and performed a variety of research and development (R&D) roles in his military service. Ziv-Av was later appointed development director at Optrotech (which later merged with its competitor Orbot and became Orbotech), then filled a similar role at Keter Plastics, before taking up a position as senior adviser to the CEO of Traffic Peek, one of the world's leaders in traffic monitoring and control. In 1990, he opened his own consultant and technological development company.

Ziv-Av, 56, continues to take an interest in cars, but from a different angle. He's abandoned the emergency-stop experiments he used to perform in his Toyota, but he still keeps a keen eye on the motor industry, and tries to analyze it using the experience and tools he has acquired over the years - especially the doctoral thesis he recently submitted, which examines technological optimization. Zvi-Av's analysis is based on engineering and mathematics: he takes a problem - no matter whether it is technological, economic or political - and breaks it down into its component parts. Thereafter, he examines the components in the simplest and most basic way, and asks what each component contributes or detracts, or whether it is irrelevant.

Back to cars. Let us try to use Ziv-Av's system on Volkswagen's most famous van, the Transporter (Kombi), which was been manufactured almost unchanged for five decades, until production was halted in the early 1990s. The Transporter was a kind of commercial Beetle, with an engine at the back and the driver sitting above the front wheels.

"They made every possible mistake with the Transporter," said Ziv-Av. "The mass of the vehicle was concentrated at the extremities, the wheelbase was too short, the center of gravity was too low and the driver was sitting in the least safe place. It was a dangerous vehicle, which had just one advantage: a large storage area that was well-suited for transporting goods." Volkswagen's mistake was perpetuated for more than 40 years, until they switched in the 1990s to an opposite concept: the engine was brought to the front of the vehicle, which became a front-wheel drive, the wheelbase was made longer and the floor lower.

How did this happen? It would appear that the powers that be at Volkswagen adhered to the outdated Beetle concept. If they had taken their vehicle apart and asked simple questions, they may have reached the modern version of their vehicle much earlier. Ziv-Av builds matrices and then feeds in data - results that he gets from questions and answers. His basic question is: "What qualities does the consumer demand of the product?" The possible answers are: performance, energy saving, safety, stability, comfort, design and price. All of the answers are given a numerical value corresponding to their importance. In the case of the Transporter, the answer is: cargo space, price, safety.

Ziv-Av, in the next stage, starts examining the engineering cornerstones of the car and their influence on the demands from the product. The main cornerstone is the location of the engine and the type of ignition. An engine at the front of the car contributes to safety, economy of internal space and production costs. All-wheel drive vehicles are safer, but their fuel consumption is less economical and the production costs are higher. A rear-located engine adversely affects stability and safety. And so on. In the end, the formula - in other words, the Excel program - spits out the optimum engineering configuration for the needs of the client. In the case of the Transporter, the result is a model that is very similar to the most recent configuration, with front-wheel drive and a front engine.

Ziv-Av does not stop here. He took these formulae and enhanced them so that they could be used to examine entire projects. Let us assume, for example, that Mercedes wanted to develop a new model of a compact car, with front-wheel drive, to compete with the Volkswagen Golf. Does Mercedes have any chance of being successful? Ziv-Av starts to feed the numerical scores into Excel: a score for the complexity of production, a score for the lifespan of the model, a score for the use of existing parts, and so on. One of the more important score in this example is relevant experience of the manufacturer. Mercedes gets a negative score on this count, since it has no experience constructing small, relatively cheap, front-wheel drive cars.

The computer spits out its answer: it is not worthwhile for Mercedes to build a compact, front-wheel drive car. The chances of failure are high.

The only problem is - Mercedes didn't ask Ziv-Av. The A-Class was unveiled in 1998 - and was a failure. The car turned over in a 'moose test' (used in Sweden to test how a car acts when avoiding a sudden danger, such as a moose) conducted by a Scandinavian car magazine. After the embarrassing incident, Mercedes was forced to spend several billion more improving the car's stability. In fact, Mercedes lost money on every A-Class it sold. Mercedes also loses money on the sale of every Smart car - an even smaller and less suitable vehicle for the Mercedes experiment.

So, the guys at Mercedes couldn't write an Excel sheet, feed in a few figures and find out for themselves that their cars would be a failure?

"Apparently not," says Ziv-Av. "In the automobile industry, and perhaps for any industry, the most senior executive, the highest-ranking decision makers, sometimes go wrong. The don't base their decisions on rational data, they get carried away by egoistic considerations like prestige. I believe in focusing. Just look at Toyota's success. Very soon, they are going to become the largest carmaker in the world. Toyota doesn't have superfluous models or versions. Volkswagen does. The VW Phaeton, for example, was a feeble attempt to compete with the Mercedes S-Class and the Audi A8."

But since carmakers sometimes make decisions that are based on long-term, strategic considerations, it may well be that Mercedes' decision to build a compact car will, when future generations of the A-Class are produced - turn out to be correct. Indeed, every model has limitations and weaknesses, and cannot encompass the complexities of reality in system of matrices - however sophisticated the matrix may be.

The success of the BMW Mini may illustrate this point. BMW, like Mercedes, specializes in expensive, back-wheel drive vehicles. So how does the huge success of the BMW Mini fit in with Ziv-Av's models?

"The Mini is a happy ending to a story that started off very badly," he explains. "BMW bought out Rover and almost collapsed. After realizing that they had made a mistake, they tried, quite rightly, to sell off whatever they could. They sold Rover for one pound. They sold Land Rover to Ford and were left with Mini. Imagine if, from the outset, they had not invested all the money, time and energy in their Rover adventure, but put it all in a BMW 2 series. I'm sure they would have been much more successful."

According to Ziv-Av, General Motors should ditch its small subsidiaries Saab and Hummer, which eat away at the company's resources. Similarly, Ford should dump Jaguar.

Is there a chance that the Ziv-Av theory will reach the right ears in the global motor industry?

"Someone contacted me from the United States, saying they wanted to introduce me to the management of some well-known companies in Detroit," he says. "But there's no point talking about it before it's a done deal."

Ziv-Av watches developments in the global market very closely, asks simple questions and feeds data into his formulae. Why is Peugeot losing money on its 607 model? Because it fails to focus. The company has always excelled at producing small, popular vehicles, not luxury cars. Why was Mercedes' merger with Chrysler a mistake? Because of a lack of focus, megalomania and loss of market position.



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