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Mercedes’ captive boosts dealership training on branded F&I products

Berry: It's great that the insurance team has its own eyes and ears in dealerships.

NEW YORK -- Mercedes-Benz Financial Services’ U.S. insurance unit is gearing up to train more dealership F&I managers to sell its First Class-branded F&I products, says Don Berry, the insurance unit’s senior manager.

Lease penetration is high for Mercedes-brand vehicles, so the insurance unit specializes in F&I products suitable for lease customers, such as prepaid maintenance and coverage for excess wear and tear.

M-B Financial’s insurance unit launched branded F&I products in 2010. Berry discussed the status of the business with Automotive News Special Correspondent Jim Henry last week on the sidelines of the New York auto show.

What’s the insurance unit’s big priority this year?

The thing we’re focusing on this year is the process. We’re launching a 3½-day training class for F&I managers talking about the process, for instance explaining the products properly, presenting the value to the customer, keeping it transparent, the use of a menu and the iPad, although we don’t dictate the use of the iPad.

Has this already started?

The first session begins the end of April. They’re sending dealer representatives to our regional offices in Jacksonville [Fla.]. It’s a big commitment on the part of dealers.

How are sales?

2014 was a great year for us, for the aftermarket products as well. The aftermarket products are all branded with the First Class brand, like wheel-and-tire, paintless dent repair, windshield [replacement], GAP, lease protection products and interior and exterior protection.

Can you put any numbers on that?

We had 22 percent growth, 2014 over 2013, in First Class protection products. Since 2011, we are experiencing that type of growth every year.

Service contracts don’t fall under the insurance unit. They belong to Mercedes-Benz USA, the automaker’s sales and marketing arm, right?

MBFS also supports the Extended Limited Warranty and prepaid maintenance. Growth there was between 6 percent and 18 percent year over year.

What does it mean to “support” those products? MBUSA owns those products and owns the risk, correct?

MBUSA owns the risk, the product design and the pricing, but the insurance team does the sales and marketing. We have eight regional insurance managers who call on M-B dealers. They make sure people at the dealerships understand the products, they are prepared with the best product presentations, and they are equipped to handle objections.

The Extended Limited Warranty is administered by MBUSA. For the First Class products, we partner with best-in-class administrators. They are administered by third parties.

The insurance team calls directly on the dealerships?

It’s great that Insurance has its own eyes and ears at dealerships. You’re not just responding to dealerships about dealer credits or “Why didn’t you buy this or that paper?” which is what you would be doing if you did both [finance and insurance].

Are you adding products?

We are working on a new product. We have what we consider an entire slate of products, but, of course, there are always opportunities. Based on the feedback we have gotten, maybe there are some opportunities on the lease side of the house. I’d put it that way.

Does leasing account for more than 50 percent of your volume?

It’s a range. Lease customers still want products. Our F&I managers still have an opportunity to sell a lot of products, and lease customers still have exposure to the same hazards of ownership [as loan customers], like wheel-and-tire, prepaid maintenance. They still want protection against lease-end charges.

Our products are all tailored around our lease-return standards, which, as you know, are geared not to repair but to replace.

Do you bundle products?

Within the First Class products, we do have wheel-and-tire, paintless dent repair and windshield together in what we call the First Class Appearance Package.

You can reach Jim Henry at autonews@crain.com

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