Q&A: Head of the DaimlerChrysler Vertriebsorganisation Deutschland predicts growth through new models

Berlin. The DaimlerChrysler Vertriebsorganisation Deutschland (DCVD) is responsible for the sales of the Mercedes-Benz, Smart, Chrysler, Jeep and Maybach brands. Automobilwoche spoke to DCVD boss Eckhard Panka about his expectations for 2004 and about working under the new block exemption regime.

Q: Mr. Panka, 2003 was quite slow for the industry. What are your expectations for 2004?

A: We believe that the market will grow -- mainly because all the car manufacturers are offering a high number of new models.

We too have fascinating new products from our passenger car, commercial vehicle and truck divisions.

I believe that an economic upswing will happen in the second half of 2004 at the earliest as the political measures (to promote economic growth) will not have an effect before that.

We are certain that they will have a positive effect on the whole of the auto market.

We also expect an increasing demand due to the high average age of passenger cars currently in use.

Q: The new block exemption has changed the auto market significantly. How is DaimlerChrysler dealing with the new situation?

A: We are thinking hard about how to run our sales organization efficiently under the new rules.

For example: product management and sales are handled separately by each brand. But we use synergies between the brands in regard to sales networks, controlling, marketing or personnel matters.

In the medium term the strong and professional dealers will be benefiting the most from block exemption.

In the end the customer decides where he will buy a product or a service.

Which is why the relationship to the customers will gain more importance than before.

Q: What do your dealer networks look like now?

A: We have "dual" sales systems with all our group brands, made up of both the group's own dealerships and contracted partners. These have proven strategic advantages.

Mercedes-Benz has more than 35 branches, 98 representatives and 460 authorized service partners.

We restructured the sales network at an early stage. However, we need to restructure our truck sales network, which we are currently working on.

We have very recently extended our Smart sales network to 10 group-owned locations and 58 dealers.

We have adapted to the fact that Smart is turning from a mono-product brand into a multiple-product brand.

On top of that we have 68 authorized service partners. Chrysler and Jeep's network restructuring program has now been completed successfully -- nine locations and 134 partners.

Q: What kind of investments are you planning for your sales networks?

A: On average we invest approximately 100 million euros per annum in the group's own sales outlets. Our sales partners invest more than 200 million euros per annum.

Q: Large Mercedes-Benz centers have been built in Munich and Berlin. Are sales centers of this size worthwhile?

A: Generally all our locations are profit-orientated and reach an attractive operating profit that can be compared with that of our sales partners.

With regards the two Mercedes-Benz centers you just mentioned, the market potential is exploited more than before.

Q: You already had contracts with all your sales partners in 2002 that met the new block exemption regulations. Standards recently had to be re-negotiated.

A: We set the new standards at the same time as the new contracts were finalized. However, once the standards came into force we saw that we needed to find more practical solutions for some of the more costly standards.

An example is our cooperation models that enable the joint use of rarely used special tools by several partners.

We have also agreed on transition periods for some of the standards to spread the necessary investments over a longer period.

Q: According to the new block exemption dealers can use original parts only for services provided under warranty. Is that a problem for you?

A: We have not yet noticed any negative effects. In 2003 our parts and accessories turnover rose by more than 4 percent.

This situation has kept us quite busy as our competitors had special offers.

We improved our offers to compete, for example by introducing bonus programs. However, price is not the only focus. Services such as express- and overnight delivery, providing a reserve bank of parts or taking back unused or old parts also need to be taken into account. Here we are also in a very good position.

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