Mercedes-Benz expects US dealers to be stunned by a deluge of off-lease vehicles

Article by Andrew Christian, on April 17, 2014

Mercedes-Benz USA is expecting its dealership network to be stunned by a deluge of off-lease vehicles at some point. At the event, the brand may be forced to increasingly sell off-lease vehicles via non-Mercedes dealers, according to the company’s remarketing manager, Stephen Nicholson. He divulged that Mercedes-Benz USA would have around 200,000 units “coming back at some point.”

He said while Mercedes dealers will be prioritized for off-lease units, the proportion of sales via non-Mercedes channels would increase as overall volumes surge. Nicholson remarked that further engagement with non-Mercedes dealers is a way to have “the appropriate number of eyeballs on the vehicles.”

He added that Mercedes-Benz USA already has 365 dealers, and it has no plans add 365 more.

Nicholson has said US annual sales at Mercedes-Benz USA could top 400,000 vehicles by around 2020. However, spokeswoman Donna Boland said in an e-mail to Automotive News that figure was an “orientation” number that Mercedes-Benz USA had used, along with others, for some planning scenarios way back two years ago, citing comments by Mercedes-Benz USA chief executive Steve Cannon.

She wrote that Cannon has “noted that quite a bit has changed since then.” Tom Webb, chief economist for Manheim Consulting, quipped that a surge in off-lease sales across the industry means several brands will require more remarketing channels -- including new-car dealers who also sell other brands as well as independent used-car dealers.

Webb told Automotive News said that Nicholson made the case, saying that Mercedes and others have a large volume of off-lease vehicle that they can’t totally absorb through their dealer network. [source: automotive news - sub. required]

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