Mercedes-Benz US dealers will add space, service capacity

Article by Andrew Christian, on May 8, 2015

Talks will start later this year between Mercedes-Benz USA and its dealerships over plans to handle the new vehicles that will be coming within the next several years. CEO Steve Cannon said that the brand is on its way to selling 400,000 vehicles in the U.S. in the upcoming years and so, around 25% of its stores will have to add showroom and vehicle storage space as well as service capacity.

He said that plans are expected to be made in 2016 and that construction will be from 2017 to 2018. He added that the automaker expects significant growth to happen, especially with the segments that are being added. He estimates that it will take about two years to reach 400,000 cars. When that figure is reached, there will be a dealer network shortage.

He explained that the dealerships have to take care of the volume of buyers. They may do so in various ways. They can add bays, widen the size of the service area, or add a second shift. Cannon revealed that a second service shift may be introduced at the brand’s Manhattan dealership, the only one that’s owned by the company in the U.S. He said that this isn’t a very common method to expand the service but it’s a “great way to sweat your assets."

Aside from the expansions, there will also be a new dealership standard called Autohaus2, which is primarily about making cosmetic revisions to replace the last upgrade as well as signage changes.

The automaker will announce more details at the next dealership meeting in Las Vegas where 9 all-new or redesigned models that will arrive within the next three years will be shown. He said that it’s rare for the company to unveil these vehicles this early but it will serve as a reminder to dealers of its growth plans.

Mercedes-Benz has been in this product launch mode for the past years and it wants to send the message out to dealerships that it isn’t running out of gas and that its plans will push through 2020. He pointed out that the brand is present in more segments than its rivals. Mercedes also boasts of more derivatives.

Cannon added that the brand considers it an advantage to be able to offer performance or luxury with a price range of $30,000 to $200,000 with the choice of Maybach, AMG or S class. Mercedes isn’t jumping on the trend set by Tesla to put pop-up stores in shopping centers. While BMW is quickly embarking on this trend, Mercedes is planning a shop-in-shop store for its AMG high-performance lineup.

It will be separated from the main showroom with a wall. This store will be managed by trained salespeople. Only select dealers with the most impressive AMG sales will have this dedicated AMG space.

It will be seen in key markets like southern Florida; Orange County, California; and the New York metro area. The message that Cannon wants to send out to dealers is for them to think of AMG not as the priciest and fastest that Mercedes has to offer but “almost like a Porsche franchise that sits inside your Mercedes-Benz franchise."

A bonus will be given to dealers who build the special AMG selling areas. A sample of this AMG shop will be shown at the next dealer meeting. Mercedes hopes that by the end of 2015, several pilot shops have already been built.

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