AM Online

Mercedes-Benz accuses rivals of chasing volume

Mercedes-Benz UK is “trying to resist the market pressures that are turning prestige into volume”, according to director of passenger cars Dermot Kelly.

Considering Mercedes could, with some justification, be accused of spearheading the drive for volume along with BMW with the launch of the A-Class and subsequent fleet deals, Kelly’s statement might raise some eyebrows. In the early part of the decade, both carmakers were neck-and-neck as they flirted with the top 10 best sellers.

BMW has become a top 10 regular, but Mercedes has taken a step back from its heavy handed approach to sales which saw a retailer backlash in the two main dealer attitude surveys from Sewells and the NFDA.

Kelly blames the “vortex of discounts” at his rivals for putting margins under pressure this year and says dealers must resist the temptation to compete on price.

“Retailers have to sell the service and the brand. It’s about the showrooms and the way we do business which gives the perceived value for the customer,” he said.

The network is being helped by the lower demand placed on the UK by the German head office, contrary to some reports.

“Mercedes is sold in more countries than other prestige brands and they can take the volumes. China and Russia can’t get enough cars so we can get the right balance.

“We hedge our currency so we have not pulled away from the US market. Others have and with the German market down, their cars have to go somewhere – and that’s the UK,” said Kelly.

In other words, while Mercedes’ German rivals are forced to flood the UK with cars to offset falling sales in Germany and elsewhere, Kelly claims that Mercedes is able to divide its production output across a broader spread of markets.

The retail network investment is nearing completion. Just a handful of sites still need to be updated; 126 of the 156 dealerships are new builds with the rest undergoing refurbishment.

Around £500m has been spent by retailers on refurbishments – Mercedes’ investment in its own sites in London, Manchester and Birmingham is thought to exceed £100m, including an industry- estimated £40m in Mercedes-Benz World at Brooklands –while a further £500m has been spent on acquisitions to form the market areas.

Additional investment required this year includes new point of sale boards which hold publicity brochures and photos. The light-wood partitions separate different models; the AMG section is differentiated by darker colour wood panels.

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