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Karl Ludvigsen

It was foreordained that Mercedes-Benz should be represented in the USA by that nation’s most prominent foreign-car importer, Max Hoffman. However their not-untroubled relationship was blown off course by a predatory third party.

Of the 803 Mercedes made in 1904, one in four was sold in America. The three-pointed star was the USA’s most popular imported car. Business was so good that in that year production of Mercedes cars began in Long Island City, New York. After a factory fire in 1907 ended that effort, the Mercedes Import Company was set up to accommodate America’s wealthy and discerning clientele.

            After the Depression the American Mercedes Company was the designated importer, with its showroom at 247 Park Avenue in New York. Young commercial artist Bill Mitchell made it a regular stop to gaze at the latest coachbuilt offerings from Untertürkheim, shapes he would remember later when he was in charge of GM styling.

            After World War 2 Daimler-Benz was struggling to life, its great factories heavily bombed. It started by making the pre-war 170 V and 170 S, four-cylinder models of only 38 horsepower—not at all suited to Park Avenue display. But new models were in the works, so sales chief Arnold Wychodil had to begin thinking ahead. His firm policy was to expand abroad through local importers who would sign agency agreements with Daimler-Benz and appoint suitable dealers.


Growing up with the internal combustion engine


            One candidate to import Mercedes-Benz vehicles would be Maximilian Edwin Hoffman. He was born in Vienna  on November 12, 1904, and brought up around the excitement of engine-driven wheeled vehicles. At the time, Vienna was a fountainhead of new automotive designs. The Hoffmann (as the name was spelled at the time) family was deeply involved in mechanical matters.

            The senior Hoffmann was among the first in his area to own a motor vehicle. Of the greatest interest to young Max was the little 122 cc single-cylinder two-stroke engine developed by DKW as booster power for bicycles. Soon after their appearance in 1920 one of these motors was powering Max’s bicycle, mounted above the rear wheel and driving through a belt. As early as 1920 Max Hoffmann was competing in club races on one of these two-wheelers and then with one of the first “real” DKW motorcycles.

            After some successes in local events Max graduated to one of the most potent motorcycles then on the market, the 350 cc AJS single. With this British overhead-valve racer he scored some significant wins, getting his first publicity in the Vienna papers. Short of stature and looking even younger than his seventeen years, Max was the butt of much kidding when he showed up with this hot machine to run against established stars. They laughed, until he sat in the saddle. Hoffmann at the handlebars was decisive, determined, and fast enough to win.

            His next step was into automobiles. His father bought him a French Amilcar CS, followed later by a Gran Sport CGS model. Both were spidery, lively side-valve fours, excellent wheels for a young amateur competitor. “Amilcar,” recalled Max. “That was a good engine—very good.” Feeling the same way, the firm of Grosse & Friedmann in Atzgersdorf took out a license to produce Amilcars under the trade name “Grofri.” Hoffmann became a factory driver of the firm’s supercharged sports models and then a dealer in Grofri cars


Success, for a time


            As an increasingly prominent figure in Viennese motor circles in the 1930s, the young Hoffmann soon had his fingers in several automotive pies. He became associated with the firm of Smoliner & Kratky, which marketed Auburn, Cord, Duesenberg, Lancia, Pontiac and Vauxhall cars in Austria, as well as several lines of aircraft. With a partner he formed Hoffmann & Huppert to import other marques. They put together an impressive range of offerings.

            Although Hoffmann represented numerous brands, Mercedes-Benz was not included. “Before the war, Mercedes was a heavy car,” he recalled. He liked lighter machines. When German-controlled countries cracked down on their Jewish population, Hoffmann moved his base to Paris. There he maintained contact with Delahaye and drove a Citroën.

            From that point on there were few opportunities for a skilled automobile merchandiser in Paris. Thus, Max found space on a Portuguese ship that took eleven days to make the crossing to America. “They cooked the same kind of fish every day. It was terrible,” he recalled with distaste. “I stayed in a deck chair for ten days!” He arrived in New York on June 21, 1941.


American ingenuity


            Max Hoffmann came to the New World with the intention of importing the automobiles made in the Old World. During the Depression years of the Thirties this had become something of a lost art. Lord Montagu of Beaulieu records that “though one or two of the oldest established concerns, like Mercedes-Benz, retained showrooms in New York, the rest had given the United States up as a dead loss. The foreign-car dealers retired to fifth-floor warehouses on the East Side.”

            Hoffmann arrived with a contact at the Automobile Manufacturers Association and a tentative deal for a truck shipment to Egypt, but times were tough for completing such commitments. Months passed without success. “I was really a little desperate for money at that point.” Scanning the wartime newspapers, he noted that the use of metals would be restricted to essential defense needs. Later he learned from a friend that women were expected to be making much more money during the war years but would have little in the way of luxuries to spend it on.

            These thoughts combined in an inspiration: “I got the idea to make costume jewelry out of plastic and metallize it. I knew of the idea already but I had to work it out here.” From a friend Max Hoffmann borrowed $300 to get his enterprise going. He made up samples of earrings and other items, buying an impressive jewelry showcase for them. In one week’s round of stores he had booked $5,000 worth of orders and put himself in the metal-plated plastic business.


Peacetime and a return to the automotive business


            By war’s end Hoffmann had accumulated enough capital to be able to return to his first love: fine automobiles. “My friends said I was crazy to give up this business and go into cars,” he recalled. “They said I would lose all the money I made in plastics.” For his new venture in America he eliminated the final “n” from his surname and adopted, occasionally, the given name Maximilian as being more fitting for a purveyor of exotic motorcars.

            In the context of those first postwar years, Max’s friends were right: Car-hungry Americans weren’t interested in imported models. “I didn’t have much money for advertising,” Hoffman remembered, “so I decided to open a showroom right on Park Avenue. It was the best thing I could have done.” The high-ceilinged display space of the Hoffman Motor Car Company at Park Avenue and 59th Street opened for business early in 1947 with a single car on its floor, a Delahaye with a four-passenger coupe body by Figoni et Falaschi. It was not exactly the way Hoffman had hoped to make his New York debut.

            Acquiring a number of imported brands, Max soon began to name dealers to handle his car lines in other cities. The first such dealer was Ray Clark’s Foreign Motors in Boston. “When I appointed a dealer in those days,” Hoffman said, “he was a European-car dealer, not a dealer in some specific make. There were not yet such things as service manuals and spare parts, as there are today.”


Forging a relationship with Mercedes-Benz


            Max had left behind a valuable contact in Vienna. This was Günther Wiesenthal, manager of the Austrian agency of Daimler-Benz AG. Having founded a Mercedes import company in 1920, the first of its kind in Austria, he had high credibility in Untertürkheim. Wiesenthal knew Hoffman well from the years before he was forced into exile. Thanks to the Austrian’s intervention, around 1950 Arnold Wychodil met with Hoffman to discuss the American-market opportunity.

            “Hoffman was an absolutely brilliant salesman, later dubbed the ‘father of the European import,’, certainly not without reason.” This was the view of Heinz C. Hoppe, a fast-rising Wychodil acolyte. “Hoffman’s achievements can best be shown by studying the situation he found when he first took an interest in the U.S. automobile market. Mercedes' pre-war models, still in production in 1950, were unsuitable for export to the USA. Although their workmanship was extremely good, as were their standards of safety and quality, they bore no resemblance to the kind of car that could take the fancy of the American-public.”

            “When the latest six-cylinder models were introduced in April 1951,” added Hoppe, referring to the all-new Mercedes-Benz 220 and 300, “Hoffman asked for and obtained an agency agreement for the USA, initially for the area east of the Mississippi. By 1953 his company ‘Mercedes-Benz Distributors, Inc.’ had acquired agency rights for the whole of the USA except for Alaska and Puerto Rico.”

            These happenings were the result of an initiative by Arnold Wychodil, who asked Max to go to California in 1953 to assess the status of the Los Angeles importer. “I had never been to the West Coast, not even as a tourist,” Hoffman recalled. He found the importer there to be in serious financial difficulty, noting, in a telling phrase, “He was a car enthusiast and not a businessman, you know what I mean?”


From sales to design influence


            Daimler-Benz soon began to feel the impact of Hoffman’s awareness of the features that helped sell cars in America. When he took over the line, Max recalled, “they had only dark colors: dark green, dark blue, dark red, dark brown and dark black—and you could not tell one from another. And they had this interior cloth, a felt, in grey and tan, that left spots after you sat on it for a while.”

            “I asked for some lighter colors,” Hoffman related, “and they said that was really out of the question.” Eventually they relented to the extent of having several cars painted in light colors and upholstered in leather. These were put on show in a courtyard and reviewed by the Daimler-Benz executives and Hoffman: “Eventually they said, ‘Fine, we’ll do it, but of course only for the American market.’ Now they sell mostly light-colored cars—with leather upholstery.”

            Hoffman believed that Daimler-Benz could successfully market a civilized version of the 1952 racing 300SL as well as a smaller sports car. “He guaranteed that he would buy a considerable number, five hundred I believe,” development engineer Rudy Uhlenhaut remembered. Although the 300SL is the model that has risen to glory, it wasn’t the most important to Hoffman. His priority was to have a smaller sports car that could be built and sold in volume. He pressed the factory to build such a sports car because he felt it would spark sales.

            Hoffman made his pitch for a smaller sports car in a Daimler-Benz management-board meeting. Engineering chief Fritz Nallinger responded, saying that such a car could be built on the 180 sedan platform. To the august gathering Max blurted out, “Das wird nichts”— “Nothing will come of that.” Admitting that “I didn't really think before I said it,” Hoffman then more formally pressed his argument that a sedan wheelbase would make the car too long and heavy for the power available. He argued his side. “But I lost,” he said, “and the 190SL was the result.” 

            Max emphasized that it was the 190SL that he considered important: “Without the smaller car the 300SL would not have come along.”  In fact Hoffman, no slouch as a racing driver as he showed in Glöcklers and Porsches, was not a fan of the 300SL: “I never owned one and I only drove one once. With that heavy steering it felt too trucky.”


The 300SL changes everything


            Hoffman foreshadowed his new franchise by arranging for one of the remaining 1952 300 SL racing coupes to visit America in 1953.  It was the star at the opening of Hoffman’s new showroom, in motor shows and at the Bridgehampton road races on New York's Long Island. Its chassis was number 4, the short-door coupe with which Kling had finished second in the Mille Miglia and won at Bern, now repainted in racing silver-bronze. The car’s subsequent history is unknown; it may still be somewhere in North America.

            By March 1954 sports-car enthusiasts around the world were testing the heft of their wallets to see whether they could afford the most desirable car of the decade: the just announced production-model 300SL. The world-premiere appearance of both 300SL and 190SL was at the International Motor Sports Show, held in New York's Seventh Regiment Armory from February 6 through 14, 1954. They were early prototypes, a lot remaining to be done on both cars before production, especially the 190SL.

            Hoffman gave the latest designs from Stuttgart the ostentation they deserved. Ornamented by the offerings of Daimler-Benz, the superb new showroom opened by Hoffman in 1953 was between 56th and 57th Streets on Park Avenue, designed by Edward Barnes. “It was the first of its kind in such an area of town,” said Heinz Hoppe, “where car sales had previously been concentrated amid the tumult of Broadway. Hoffman hired the distinguished architect Frank Lloyd Wright to design a showroom into which Mercedes-Benz moved in 1954.” This became available after Hoffman had a fractious split with Jaguar.


Trouble in paradise


            Behind the scenes, however, all was not well with the Hoffman-Mercedes relationship. “The sales structure that Max Hoffman built up for Daimler-Benz AG in the USA proved to be rather troublesome,” Heinz Hoppe related. “He signed up an exclusive customer list within a very short time indeed, including numerous Hollywood film stars such as Bing Crosby, Marilyn Monroe, Zsa Zsa Gabor and Eddie Fisher. With his reliable sales instinct he also knew that the location and decor of the showroom ought to match the quality of the product.

            “If Hoffman's sales organization had a major flaw,” Hoppe continued, “it was that it was set up primarily to serve his own interests. It tended to disregard those of his 40 or so sub-agents, the customers, and the manufacturer back in Germany." The sub-agents' main task was to report potential customers to Hoffman, against payment of a rather small commission. Hoffman then collected the main profits.

            “He was once quoted,” added Hoppe, “as saying that he worked for fun, had no need of more money than he already earned and had no intention of letting business rule his life. However, by running his own branches in the main sales areas—New York, Chicago, Los Angeles—he made sure that most of the profit ended up in his own pockets. The build-up of an organization that would cover the entire territory efficiently was neglected.

            “The customers suffered badly from Hoffman's sales structure.” Heinz Hoppe said. “It landed them with a luxury automobile but offered them no prospects of reliable servicing for it. Daimler-Benz AG in Germany suffered too, as its products' good reputation at the time of sale began to deteriorate because of poor maintenance. A flood of complaints soon set in, criticizing not only poor spare-parts availability and servicing errors but also warranty-claim problems. All this led to continual disputes between Stuttgart and New York.”


Palace intrigue


            In these earliest days Heinz Hoppe was a sales and marketing trainee at Untertürkheim. This changed in November 1954, when mid-way in his training he was uprooted to join a small team representing Daimler-Benz in the United States. Operating on the company’s principle that a nation’s capital was the heart of its industry and economy, space had been found in a Washington, DC hotel for the beachhead staff.

            “The early days in the USA were more of an escapade than one would ever have believed,” Hoppe recalled. “We still had no office and had been expressly forbidden any form of contact with Hoffman. I stayed in a hotel, still without a proper contract of employment, received copies of the sales correspondence and had only one contact address at the Coudert Brothers law firm.’ Moreover Hoppe had to cope with the freebooting Carl F. Giese, under whom he had served in the army during the war.

            Having successfully launched production of M-B products in India with Tata, carpetbagger Giese was granted the right by Daimler-Benz to go and do likewise in North America. Finding that Hoppe had spent some time in the United States, he seized on the young man as the right person to assist him in his conquering of the New World. That led to Hoppe’s abovementioned arrival at Daimler-Benz in 1954.

            ‘Early in December,’ Hoppe related, “Giese notified me by telex of his forthcoming landing in New York. I collected him from the airport, but there was a shadow over our relationship from the very start. The top-class hotel in which he had planned to stay was fully occupied. He was extremely angry to be accommodated in the no less distinguished Plaza Hotel. I showed him my carefully compiled three-day visit schedule, with all the dates and times coordinated; this he threw out of the cab window immediately.’

            After a stop in Milwaukee for a fruitless conclave with Carl Kiekhaefer of Mercury outboard motors, who was entirely unsuitable from the get-go as a possible producer of the Mercedes-Benz 220, the men proceeded to California. “We talked to Max Hoffman in a Hollywood hotel bar,” Hoppe recalled. “He had met us at the airport in Los Angeles. Even this event rapidly took on a most bizarre form. It was obvious that the two protagonists could hardly become friends, since in order to build up his planned empire in the USA Giese would have to eliminate Hoffman in some way, yet there was clearly no cogent reason for this to happen.

            “Giese piled one criticism on another in the course of the conversation,” Hoppe remembered, “culminating in the allegation that Hoffman was selling too few cars. The latter's disgruntled reaction was to point out the technical drawbacks of post-war Mercedes models: no automatic transmission, no provision for installing air conditioning and the rather comical ‘trafficators’ with which the 170V and 180V models were still equipped instead of flashing turn indicators. He was too capable a negotiator not to have the right answer ready to every criticism.

            “Although the tone of the conversation was acrimonious,” said Hoppe, “an unavoidably comical element was programmed to take over in due course. Before the meeting Hoffman had engaged the services of a fortune-teller, arranging for her to offer her services in the hotel bar ‘quite by accident.’ Hoffman now called over this young, exotically clad personage and, as previously agreed, she extolled Giese’s great past career as an army general and predicted that his career would take a steep upward path to success. Giese was overcome with joy and Hoffman was no less satisfied at having played this ingenious trick on his opposite number.

            “Daimler-Benz AG still had no clear picture at that time of the best way to organize its American business affairs,” Hoppe continued. “However, one thing was widely accepted: the time had come to part from Max Hoffman. Yet there was anxiety too about tackling the American market alone, where practices were quite different from those normally adopted at headquarters, where European thinking predominated. For psychological, financial and staff reasons, there was a certain reluctance to ‘go it alone’ on this overseas market only ten years after the end of the war."

            “Our tasks included monitoring the activities of Mercedes-Benz distributor Max Hoffman,” Hoppe added, “dealing with complaints from dissatisfied customers and establishing contact with American companies. All kinds of possible cooperation were examined, including every aspect of the Daimler-Benz AG production program, particularly its engines.


Founding Daimler-Benz of North America


            “Our attorney at Coudert Brothers repeatedly warned us that any business activity on the part of Daimler-Benz AG in the USA would have tax repercussions and that we should therefore not delay in setting up an American subsidiary. The result was the establishment on April 7, 1955, in Washington, of ‘Daimler-Benz of North America, Inc.’ (DBNA), registered as a company in the State of Delaware with $1 million as founding capital. Giese was made president and I was his deputy. Our ‘central office’ in Washington, with its four male and two female employees, was transferred to the new company.

            One of Carl Giese’s ports of call was New Jersey’s Curtiss-Wright, where the subject of conversation turned from airplane engines to cars. Giese’s discovery that Curtiss-Wright had a management contract with Studebaker-Packard led to the suggestion that there might be a way to sell Mercedes-Benz cars through Studebaker dealers. He proposed to Hoffman that the new 220 be offered through Studebaker outlets, with Hoffman to receive $200 for each one imported. “I agreed to this,” Max recalled, “as I would still be able to sell all the Mercedes models, including the 220, to my own dealers.”

            As it happened, a turbulent two years were needed to reach contractual agreement between Daimler-Benz and Curtiss-Wright. “After the contract had been signed,” Hoppe related, “the most urgent task was to cease working through Max Hoffman on the basis of the notice served on him for May 1, 1957 and for me to obtain possession of all the vehicles in inventory and spare parts on behalf of Daimler-Benz North America. Not surprisingly, there were considerable differences of opinion and arguments about valuation between Hoffman's staff and our own specialists.

            “The real issue,” added Hoppe, “was of course the compensation to be paid for terminating the contract. Agreement was finally reached at two million dollars, which Studebaker was to pay off by way of a special fund at $20 per vehicle sold. Despite all these difficulties, takeover was completed on schedule without any market uncertainty arising. Most of the customers regarded our separation from Max Hoffman as at least a slight chance of future success in obtaining spare parts, processing warranty claims etc., now that Daimler-Benz AG was in a position to exert its influence more directly." “Against this,” Hoppe said, “many customers, banks and influential personalities in the USA were highly skeptical as to whether our expensive, top-quality passenger cars ought to be sold by the shaky manufacturer Studebaker, of all companies, with its unstable sales organization. This was precisely the view I had put forward. All too soon, it was to prove correct.”

            “I liked Mercedes very much,” was Hoffman’s valedictory comment. “I was very, very sorry that it happened. But I also had five other agencies then.” It later cost Daimler-Benz $18 million to reacquire the American sales rights and spare parts from Curtiss-Wright. That, as they say, is another story.