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Smart split plan from Mercedes

Mercedes-Benz retailers will invest in standalone Smart showrooms within two years as more models are launched and sales volumes build up.

The move, which mirrors BMW’s decision to begin splitting off its Mini franchise, is part of a staged course of action to give Smart greater profile with consumers. Stage one, due to be rolled out this year, is to erect Smart-branded totem poles outside Mercedes showrooms to give the brand its own identity.

“Initially we are looking at four or five locations for the towers,” says Wilfred Steffen, DaimlerChrysler UK (DCUK) president and CEO.

“There is interest from the network – hopefully as we get more models and volume grows, Smart will grow out of the Mercedes showroom.

In a couple of years from now we will have dedicated Smart showrooms and aftersales facilities where appropriate.”

In return for the investment, DCUK will focus on boosting the brand’s exposure with consumers, using the ForTwo as the halo car to help Smart grow sales with the Roadster and new ForFour – it admits that many people are not familiar with the full range.

Last year, volumes were up 21.55% at 11,844 units, and Steffen believes they could hit 25,000 over the next five to 10 years.

“We are encouraged that there is enthusiasm with our dealers to continue to be engaged with Smart – they want to invest,” he adds.

However profits for the DCUK division are unlikely for another “three to four years”, according to Smart’s new chief executive Ulrich Walker.

The decision to relocate the Smart franchise into separate showrooms will also free up more space in the Mercedes dealership, vital as more models are added to the line up over the next 18 months, including the R-class and B-class sports tourers.

However, retailers will not be expected to squeeze every model into the showroom. “Each of our partners has a market area with four or five sales centres – between them they will house the full range, but not necessarily at every site,” says Steffen. “It’s the same as our approach to demonstrator requirements.”

The Brooklands brand centre in Surrey, scheduled to open in summer 2006, will help: it will showcase every Mercedes model, with room to display more than 100 derivatives.

Mercedes retailers face a slow start to 2005, with sales picking up in the second half as the new models are launched.

Last year volumes dipped 12% due to lack of product. A-class was in short supply – the new model is due in February – and M-class is in run- out until September’s replacement. Volumes this year will be similar to 2004’s 82,000 units.

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