The weak economy has prompted several luxury brands to bring back free scheduled maintenance, but Mercedes-Benz is having some success with its prepaid service program.
Since the December 2009 launch of the Mercedes-Benz Star Service prepaid program, 30 percent of new buyers have bought it, compared with 5 percent for the previous pay-as-you-go program, said Alan McLaren, vice president of customer service.
Mercedes-Benz dropped free scheduled maintenance in the 2004 model year and tinkered with various maintenance offers. But the downturn in new-vehicle sales over the past few years prompted the company to rethink the situation.
The Star Service program saves customers more than 30 percent on service work compared with buying it as-needed, and the program has easy-to-understand lists of covered maintenance, McLaren said.
The program also helps dealers retain service customers and increase brand loyalty, he said.
Brands including Jaguar, Lincoln and Volvo have returned to free scheduled maintenance, he said.
Mercedes' Star Service plans are based on engine size and range from two years or 20,000 miles to five years or 50,000 miles. For a V-6 model, the cost ranges from $619 for a two-year contract to $1,942 for five years. For a diesel model, the most expensive, the cost ranges from $1,129 for two years to $3,045 for five years.
Mark Hoch, general manager of Flagship Motorcars, a Mercedes-Benz dealership in Lynnfield, Mass., said 70 percent of his new-car buyers take the prepaid program because "it is fairly priced."
Hoch estimates the contracts save customers about 30 to 35 percent and "lock in today's labor rates."
"To have your car serviced at a Mercedes dealer, it has to be affordable. This isn't really a profit center for us. It's a long-term customer retention tool."
Michael Cantanucci, who has one Connecticut and two Florida Mercedes-Benz dealerships, said the program "takes the uncertainty out of maintenance for the consumer because it's locked in, and they got the cost down as low as they could to make it attractive for our clients."
The cost of the prepaid maintenance program can be included in a lease or finance agreement. Iris Johnson, project lead for Mercedes parts and service marketing, said the residual value of the car generally increases for lease customers who take the plan, lowering the monthly cost to as low as $10 for a three-year plan on a C class.