Increased competition and the growing age of key products such as the M class made 2003 a difficult year for dealers, says George Grinzewitsch Jr., chairman of the Mercedes-Benz Dealer Board.
New products are coming in 2004, but it will be a transitional year, says Grinzewitsch. Key vehicle replacements come in 2005-06.
Dealers also are concerned about Mercedes-Benz quality problems and the perceptions those problems have created in the market. Grinzewitsch says he's confident that Mercedes is ironing out these problems, and that the brand's image will improve.
Grinzewitsch was interviewed by Staff Reporter Diana T. Kurylko.
How would you sum up the past year for Mercedes-Benz?
2003 was a rough year. Both dealers and Mercedes-Benz USA were confronted by challenges - product life-cycle issues and competing in a market that is increasingly incentive-driven, while trying to protect brand equity and maintaining profitability. I think there are a number of dealers out there that have been frustrated by all of this. The long-term prospects are great. Most dealers also recognize this. For 2004 we have the new McLaren supercar, the new SLK, and in 2005 we'll getting into the biggest product offensive in the history of Mercedes-Benz here in the United States.
What is your hot product?
We have several. Out of the core product, the C230 sports sedan has been an overwhelming success. The other success is the E class, and we are in somewhat short supply of that car. Also, our S class is coming along. The entire AMG lineup continues to be very hot.
What new products are on the way?
We're excited about the facelifted C sports sedan that we just started to receive. We have a new SLK to look forward to this year. The new SLR supercar is coming out. We just received the new station wagon model of the E class. We have some new AMG 65 products that will be outrageous. Shortly, we will have a new M class and we will get into the crossover segment with the GST and the CST.
How is Maybach doing? What does the brand bring to a Mercedes-Benz dealer?
We're a Maybach dealer, and we've been very impressed with the product. The customers that have had the opportunity to see the product, touch it and drive it are blown away. The brand Mercedes-Benz doesn't need any help but the Maybach is something that will add to the brand.
What kind of market is there for Smart in the United States?
I think there is a nice market for the Smart. I'm very excited about the prospects of the Smart car and would love to represent the brand.
Is creating a separate franchise for Smart the way to go?
I agree with branding Smart separately because the core values are different. There is some crossover with quality and the upscale image, but Smart is definitely a different segment.
Can the new car derived from the A class, scheduled arrive in 2006, sell well as a luxury vehicle? Are Americans prepared to pay more for a small car?
I don't know that they would have to pay more. We are very competitive. There may be a slight premium. It depends on how Mercedes-Benz brings that car into the market. I would not expect it to be brought in with the same design and layout as in Europe. It would be a U.S. specific car. I think I could sell that car. The more we can stratify our product the better.
What is the priority of the dealer council in 2004?
One of the top priorities is to continue to try to enhance the communications between the dealer board, dealers and Mercedes-Benz USA. We have worked hard on that. We would also like to do whatever we can to make Mercedes-Benz more successful in the U.S.
How involved is the dealer council in manufacturer-driven programs and decisions that affect dealers?
We are very involved. Mercedes-Benz USA executive management brings us into most of those types of programs well before they are introduced.
For example, we have worked on the loaner car program to increase the monetary allowance on vehicles and expand the program to different models. We've tried to create a program so that dealers can rotate the fleet throughout the year rather just in November and December.
They have worked with us on creating a more dynamic allocation system, designed to get the right car to the right place at the right time. In year's past, the program was based on 12 months of performance, now it's focused on 120 days and takes regional and seasonal differences into account. They just reviewed the big picture items that we are part of.
What are the dealer council's top concerns?
Maintaining dealer profitability is on everyone's mind. This was a very difficult year. It was expensive to do business, but things will turn around for Mercedes-Benz dealers with all the new products in the pipeline and the new segments that Mercedes-Benz is creating. This will bring new buyers into the brand.
Many dealers are concerned about the reports concerning quality. But we know that improvements have been put into place, and I am confident these improvements will change perceptions.
Mercedes-Benz has always been very careful in its image and about delivering to customer expectations - it's not something that is going to change.
The M class is something dealers are concerned about. The luxury SUV segment is booming. The M class is a solid performer but it's not there alone in its segment like it was in 1997.
With the product we have coming, we will be able to take advantage of the growing light-truck segment.
Are dealers making money on new-car sales for your franchise?
Yes, across the board I think so.