Mercedes-Benz Financial Services USA LLC (MBFS) is a company that takes technology seriously. Its senior executives speak sincerely about a "culture of innovation", and it considers the maintenance of robust and modern systems architecture to be integral to customer experience of the brand. But mission statements only go so far without action to back them up – as such, in the first half of 2011, the company decided it needed a major systems update.
Like many American auto lenders, it had been working with legacy mainframe systems that just weren’t agile enough to keep up with evolving growth expectations. "Legacy systems really aren’t uncommon in our industry" says Rodolfo Dominguez, Director of MBFS’ Nexus program, an initiative designed to merge the business’ three contract management systems – one for commercial leases and loans on the truck financing side of the business, and two processing consumer loans and leases on the passenger car side – into one scalable platform.
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"We have a few greenscreen systems still around, including highly customised mainframe systems built up over the last few decades," Dominguez said, "I don’t think there’s been a lot of investment in new technologies."
Determined to buck the trend, Dominguez bought in the automotive practice of a Big Four consultancy firm to assess potential solutions. Participating in the selection process as a subject matter expert was senior practice manager Robert Johnson, who began his career in the finance software arena of the 1990s before moving into automotive consulting.
Johnson’s firm provided advisory services to support MBFS in its efforts to select the vendor, while MBFS provided content expertise in business and systems requirements. After prolonged scrutiny, CHP Consulting’s ALFA system was chosen.
While CHP had not historically been a big name in the US, it was eye-catching to MBFS for one particular reason: because of its heritage int he world of commercial asset finance, ALFA could handle requirements for the Daimler Truck Financial (DTF) business in addition to Mercedes-Benz’s Financial’s growing consumer loan and lease business.
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By GlobalDataBy the end of 2012, MBFS’ Americas portfolio grew to a record $45 billion. Of that amount, combined car and truck lending operations in the United States and Canada ended the year with a portfolio of $39 billion. This growth made the investment in a ssystems architecture working across both car and truck markets in the U.S. and Canada even more essential. But it was ALFA’s user interface, its scalability and its workflow- driven basis that solidified the choice, says Johnson.
"Considering that ALFA was a web-based interface that had the same look across all components and could handle the same kind of volumes as mainframe systems, it really was something new."
MBFS is now executing its Nexus program in partnership with CHP, with its three contract management systems due to be replaced with ALFA over the next three years. First will be the commercial (lease and loan) system, which has just entered initial testing with a view to going live in February 2014. After that will come the consumer loan system, due to go live at the end of next year, and finally the consumer lease system – which currently handles more than half of MBFS’ passenger car consumer business – with a launch date in late 2015.
But the Nexus project wasn’t the only fruit of MBFS’ selection of CHP Consulting. Following his close work with the provider, Johnson himself has now moved to work with CHP, in the role of Global Head of Automotive Finance.
Given his experience in optimising the consumer contract management capabilities of ALFA in the context of MBFS, and his knowledge of the US market’s systems requirements, he will now be spearheading CHP’s growth both into North America, and into consumer motor finance markets more generally. In addition to this, being based in the USA, he will be in a position to liaise regularly with CHP’s North American customers as they implement ALFA systems.
At the time of writing, Johnson was in California, working with another major automotive captive lender, soon to be announced as the next US adopter of the ALFA system.
"These two big contracts show that ALFA is more than fit for purpose in the US market" says Johnson. "They wouldn’t have happened
without a solid, intuitive system. There are lots of companies out there looking to consolidate their systems onto a single platform, and they’re looking for something new. I believe we can provide that."
Snaphshot: Mercedes-Benz Financial Services USA
- In September 2012, the company’s Americas region – comprising the United States, Canada, Mexico, Brazil and Argentina — celebrated a milestone when its combined portfolio reached $40 billion. By the end of the year, the portfolio grew to $45 billion. The combined car and truck lending operations in the United States and Canada ended the year with a portfolio of $39 billion.
- On the passenger car side of the business in the United States, MBFS wrote $1 billion worth of new business in November 2012, followed by $1.2 billion in December. The company posted a 25% year-on-year increase in its portfolio, finishing 2012 at $25.5 billion.
- Growth continued in January 2013, when MBFS wrote another $1 billion in new business, marking the first time in history that the company achieved $1 billion in new business acquisition for three consecutive months.
- MBFS USA is headquartered in Farmington Hills, Michigan, with a business center in Fort Worth, Texas.
- In the US trucking industry, it conducts business as Daimler Truck Financial and finances Daimler Trucks North America commercial vehicles branded Freightliner, Western Star, Thomas-Built Buses and Mitsubishi Fuso Trucks of America.
- Daimler Truck Financial financed an all-time record of 23,500 units in the US last year, compared to 16,000 units in 2011. This increase fueled the growth of the Daimler Truck Financial portfolio, which rose 56% from the beginning of 2010 to the end of 2012, when it reached $7.5 billion. Daimler Truck Financial also set an all-time record for total market penetration at 23.48%.
- In 2012, Daimler Truck Financial achieved its lowest losses and delinquencies since 2003. It was also, for the seventh time in eight years, named the number one captive finance company in the United States by American Truck Dealers association ATD.
- In addition to the US, MBFS USA also serves as the center for operations in Canada, Mexico, Argentina and Brazil, and employs some 1,500 staff throughout the Americas. The company is part of the Daimler Financial Services Group, headquartered in Stuttgart, Germany, which conducts business in 40 countries and employs 6,700 people.
fred.crawley@timetric.com
