Mercedes-Benz USA is lifting a key restriction on Tier 3 local advertising by dealers. Instead of limiting that ad spending to new-car sales, Mercedes will let dealers use the money to promote any area of the business.
"They can spend money on new, preowned, service — whatever they think their need is," said Ken Schnitzer, chairman of the Mercedes-Benz Dealer Board and owner of four Mercedes-Benz dealerships in Texas. "So that's really a big improvement."
The company's U.S. leaders talked to dealers about the change earlier this month at its national dealer meeting in Miami. It is unclear exactly when the restriction was lifted, but it is effective now, dealers said. Mercedes-Benz declined to comment on the meeting or the change.
While the change seems like a simple thing, it should make a big difference and give dealers a chance to improve their service retention or their used-car sales, dealers said. There is no change in the amount of money earmarked for Tier 3 cooperative advertising nor in the formula used to determine available co-op money, they said.
Dealers had been asking for the change. Mercedes previously had relaxed the rule to allow the Tier 3 money to be used once a year to promote the company's preowned sales event in the fall, said Jeff Aiosa, a Mercedes dealer in New London, Conn., and the Mercedes-Benz line representative for the National Automobile Dealers Association.
Aiosa says he plans to mix up how he uses the money to include the service department and used-vehicle sales in addition to new-vehicle sales.
"I've always been a big supporter of fixed operations supporting the variable side," Aiosa said. "Some would argue the first car is sold in the sales department and the second car is sold in the service department. So they go hand in hand — service sells cars."