How is Mercedes-Benz USA to work with — you've got other franchises, right?
They're very accessible for the dealer. I think it's because they have only 390 dealers; they can support them well and support them in a way that's a bit customized. They're much more accessible than I would have expected.
How are Mercedes sales? And how's the model mix, mostly SUVs and crossovers?
There's a lot of demand for Mercedes products. Like everybody else, mostly SUVs. I think there are more SUVs being sold nationwide; that certainly is the case in the Northwest. I also operate a dealership in the South, and the demand for SUVs there is also as strong as ever, and Mercedes has a great SUV lineup.
How is Mercedes-Benz USA on facility upgrades?
MBUSA says 95 percent of all dealers did all the necessary renovations between 2014 and 2018, when it implemented what it calls its Autohaus 2 facility program.
Does the brand allow much flexibility?
I think Mercedes has been really flexible on those requirements. Also, Mercedes guaranteed us we'd have 10 years from the original implementation of the program, so the network is set for now and in a really good place from a facility compliance perspective. They understand that there will be more focus on digital in coming years and having a dealership that requires every model be on display in the showroom isn't feasible.
Has Mercedes put in place any standards on data security and privacy for the dealership network? What do dealers think?
MBUSA has a data-sharing agreement and a digital services agency and support agreement that govern the relationship between MBUSA and the dealers and what requirements need to be in place. Of course, as different states pass different consumer privacy and protections, these will continue to be updated. This is a serious issue for every dealer, and we are addressing it.
Does Mercedes have specific guidelines on digital retailing in place? How are the dealer requirements?
M-B has multiple approved providers for digital retailing that were introduced over the last six to nine months. I think dealers want a choice of providers, and M-B has been really good about that, very fair in how they have dealt with this topic and not placed requirements to go with a single-source vendor. By providing a number of options, it allows the dealers to work with the vendor they are most comfortable with. Currently, we have four we can choose from, and all are good.
How is the co-op advertising program?
M-B has a great co-op program for dealers. It is so simple and straightforward: You sell a car, and you get a specific dollar amount. That's all there is to it. And dealers can use it for a really wide variety of advertising. M-B adjusted their co-op programs a few years ago based on dealer feedback, and the current program is very successful.
Does Mercedes have specific requirements regarding online reviews?
Mercedes is not prescriptive at all in managing our social presence. Mercedes doesn't tell us every little thing. The marketing programs are flexible. They allow us to use our own ingenuity. I think that's helped Mercedes grow, and I think it's a reason why we've performed well as a brand.
Does your dealership group offer its own subscription program, and are customers interested?
We've run a very small, very limited pilot in one market. There certainly is some interest, but there are challenges in implementing it in a large-scale program. We've seen some promising developments and will continue to listen to our customers to see where they find value.
Does Mercedes-Benz have its own program? Do you participate?
Yes, M-B does have subscription programs running in several locations, including Atlanta, where we have an M-B dealership. There are certainly customers who find this type of offering compelling, and we would be happy to be part of this program so we can get a better understanding of consumer preferences as they change.
How are dealers managing new-vehicle affordability concerns? Have those concerns affected performance in the F&I office?
This is something I feel was really a topic of concern when I first started in the automobile business and will be for a long time to come. Despite being a luxury provider, it's important we offer customers a compelling value for their money. We have programs for Mercedes-Benz that really allow customers to buy for relatively low payments. For example, we have "near-new" programs like former loaner vehicles that are really compelling because they qualify for new-vehicle incentives. We also have the entry-level A class and the GLA; those have payments to start at a really reasonable level as part of the product portfolio. M-B is making a real effort to make options and packages less complex and bundle the most popular packages, which really helps from an ordering and stocking perspective.
Is Mercedes-Benz USA doing enough to promote certified pre-owned sales?
Mercedes puts a lot of power behind the CPO brand. There's reason for them to do that, of course, because they do so much leasing, and I think they have for a long time because there's a lot of momentum behind CPO. We have to maintain resale values, and the CPO program has to do that. It's also a good way to bring customers into the brand, a great way to bring in a customer who wants a Mercedes but can't afford a new one.
Do customers really understand what goes into CP0 — the reconditioning, the warranty?
We put a lot of effort into reconditioning our vehicles. The Mercedes advertisements are on point, on message: the CPO, "It either is … or it isn't." Mercedes just pounds that into their advertising, their messaging. It's a real area of profitability for the dealer. I give M-B 10 out of 10 on CPO programs.
Is Mercedes-Benz USA adequately helping its dealers prepare for vehicle electrification?
I think Mercedes has always been a leader when it comes to new vehicle technology, and we think that will continue. Although the EQC launch was delayed here in the U.S., the reception in Europe has been positive, and M-B will launch a number of new fully electric and hybrid vehicles over the next several years. M-B also continues to be a leader in autonomous driving features, and with the next-generation S class coming, I think we'll see that next step in the process.
Although many of these are global topics, there's an understanding of the U.S. market at the board level. [Daimler CEO] Ola Källenius spent a great deal of time in the U.S. market, heading up the plant in Alabama.
Do you have charging stations at your dealerships?
We do. There's a whole readiness program. As the technology changes, there are always going to be programs that are really designed at getting the dealers ready.
Is Mercedes-Benz USA offering dealers financial support for the investments they need to make to adapt to these changes?
We haven't discussed financial support specifically for that, but MBUSA has always supported its dealers as changes have been made.
How are declining new-vehicle sales affecting Mercedes dealerships' profitability?
I really don't see this being a big issue for Mercedes-Benz. Sales were strong in 2019; the product lineup is really great, with the all-new A class and GLB and the completely redesigned GLE and GLS all having launched in the last 12 months.
New-vehicle margins are being squeezed throughout the industry. What are Mercedes dealerships doing to help profitability and reduce expenses?
I think MBUSA has been very reasonable in helping to reduce expenses. One example of this is, over the last couple of years, they have progressed to doing much more training digitally or in-dealership, as opposed to having our employees travel to training sessions around the country. This helps with travel expenses and keeps our people in the store while still getting the training they need.
One other item to note here is the focus on the service business. This is really critical for all dealers, but MBUSA has really helped to focus this by providing data on where customers are servicing and helping dealers capture this business through marketing, etc.
Nicholas Speeks, the new CEO, and his executive team have really been very open to discussion on this topic. They have been willing to have open dialogue on elements of the margin and what's really important to the dealer board and the entire dealer body.
Are Mercedes' production and inventory levels in line with demand? Are incentive levels appropriate to manage that?
For the most part, inventory and production are really good. You wish you always had a few more of certain models, like the G class, but that scarcity helps keep the product image strong. We've got a really strong lineup of SUVs from the GLA, GLB, GLC, GLE and GLS, and M-B has done a great job of adjusting supply on passenger cars to keep the appropriate levels without having to make big adjustments in incentives. At certain times of the year and production cycle, there may be a few too many of some models, but overall, the product lineup and inventory are in a good spot.
