Dealer profitability at Mercedes-Benz inched 0.1 percent higher last year, the luxury maker told its retailers at the make meeting Saturday.
"We'll take every bit that we can get. Dealer profitability is certainly the central focus for dealers," Mercedes-Benz Dealer Board Chairman Greg Barnes told Automotive News after the meeting. Barnes is president of Bill Ussery Motors Group in Coral Gables, Fla.
Dealer profitability would likely have been higher were it not for an inventory shortfall in July related partly to a changeover in 2019 models.
It's a work in progress, said Jeff Aiosa, owner of Mercedes-Benz of New London in Connecticut.
"Obviously, it's not our standard, so we continue to collaboratively work to get it up," said Aiosa, who is also the NADA brand representative.
Mercedes dealers are optimistic that profitability will increase this year.
"I don't think that we're going to have the constraints, the headwinds, that we've had with inventory" last year, Aiosa said.
Mercedes told dealers it is working to reduce usage of the automaker's stair-step program, which financially rewards dealers for meeting sales quotas.
The program diminishes brand value, Aiosa said.
"It fosters mistrust between the customer and the dealer network," he said. "The unintended consequences of stair-steps is ... if not mitigated, [it] will be the death spiral to this industry."