Mercedes-Benz will tweak U.S. dealer payouts, relax objectives

ATLANTA -- Mercedes-Benz USA will tweak dealer payouts and relax objectives as the automaker braces for a pullback in sales in the wake of the coronavirus pandemic.

In an email to U.S. dealers Monday, CEO Nicholas Speeks quoted England's wartime Prime Minister Winston Churchill while underscoring the "unprecedented" situation facing the auto industry.

"Winston Churchill once said, 'If you are going through hell ……. KEEP GOING!' " Speeks wrote to dealers. "The challenge we have is not of the dimension he was forced to confront but that is exactly what we, all of us, are going to do: Keep going."

On Tuesday, Mercedes parent Daimler Group said it will shutter car, van and commercial vehicle plants in Europe for at least two weeks in an effort to contain the spread of COVID-19. Global supply chains currently cannot be maintained to their full extent, Daimler said. The company's U.S. plant in Vance, Ala., remains open, for now.

The email to dealers, obtained by Automotive News, laid out several initiatives aimed at boosting dealer profitability amid an anticipated decline in showroom traffic.

"MBUSA remains absolutely committed to providing you with the support necessary to conduct and preserve both your and our businesses, which we see now more than ever are integral to each other," Speeks said.

For the first half of the year, Mercedes will guarantee margin and performance bonuses, even if dealers don't fulfill requirements, such as CSI surveys and employee training.

For March, Mercedes will give dealers a base payout per vehicle sold, even if they don't meet sales objectives.

To offset expenses, finance captive Mercedes-Benz Financial Services (MBFS) will consider deferral of principal payments related to real estate and capital loans for up to 90 days. MBFS also will consider, on a case-by-case basis, postponement of customer payments for up to 90 days.

The changes highlighted in Speeks' email are an "example of the measures we are taking to ramp up support for our dealer partners amidst a dynamic situation which continues to evolve," Mercedes spokesman Rob Moran said.

A Mercedes dealer welcomed the factory's financial support and relaxation of objectives.

"Shoring up profitability supports the network to stay open for business through this unprecedented time of instability," said the dealer, who requested he not be identified.

Speeks briefed dealers on Mercedes' plans to allow most corporate employees to work remotely starting Tuesday. The factory-owned Manhattan store will remain open, though non-customer-facing staff can work remotely.

"As always just what you do every day: Keep our customers happy, provide a first-class experience and environment, sell cars, service and maintain vehicles — keep the flag flying," Speeks told dealers.

"This will not prove the easiest task you have ever accomplished and the road ahead may perhaps be more difficult than we can, at present, envisage."