Daimler review on own dealerships is still ongoing

Article by Anita Panait, on August 2, 2013

Daimler has yet to complete an internal review into the role of its "Own Retail" dealerships, a network of showrooms in Germany that the carmaker owns and operates, according to chief executive Dieter Zetsche. Unprofitable company-owned dealerships account for around half of its car sales at Daimler’s Mercedes-Benz brand in Germany.

In contrast, franchises account for a good part of sales at local rivals Audi and BMW. During a conference call with analysts, Zetsche disclosed that “broader scope studies” over the performance and the financial visibility of its carmaker’s retail business as well as discussions about potential actions to be taken are ongoing. He added that “at this point of time,” there is nothing concrete to be announced.

Documents seen by Reuters showed that Zetsche is targeting "Own Retail" operations as part of a plan to save around EUR2 billion ($2.64 billion).

Mercedes sold its holdings in a French dealership with four showrooms earlier this month to reduce its exposure to automotive retail. Automotive retail’s inherent low profitability has made it harder for Daimler's car division to achieve its 10 percent operating margin target.

On the other hand, Daimler’s Chief Financial Officer Bodo Uebber said that they expect the carmaker’s free cash flow to somewhat lower in the second half of 2013 due to an almost 50-percent increase in fixed capital investment in the first six months and due to around EUR600 million that would be used to acquire a 12-percent stake in BAIC Motor. [source: automotive news - sub. required]

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