Mercedes-Benz is on a quest for a bigger slice of the UK new car market. That puts a great onus on the carmaker to work closely with its dealers to win more customers.
Early last decade the German brand restructured its UK network, during which it began to build its own trading division.
Eight years on, Mercedes-Benz Retail Group is now a stable and integral part of the UK network, representing the manufacturer alongside franchisees such as Inchcape, Marshall, Pendragon, Ridgeway and Sytner.
The sixth largest dealer group by turnover in the UK, it also accounts for almost one in four of Mercedes’ new car sales in the country.
Franchised dealers often accuse manufacturer-owned retail groups of having better terms or special advantages due to their parentage. Mercedes-Benz Retail Group managing director Neil Williamson is having none of that.
“Mercedes-Benz dealers are a very strong bunch, we compete with very strong players. We have the same terms and conditions as any other Mercedes dealer, there is no special treatment.
“I could argue that we have to per-form even higher, the expectation of Daimler of us is probably higher than other retailers.” There is one important advantage to the group, but it is one that is shared by any retailer committed to one manufacturer. All we do is Daimler products – we have no distractions. It gives us a very singular focus.
"My operational directors are a team of Mercedes-Benz people. We can share our knowledge easier than others, we all speak the same language.”
Williamson also sits on the MBUK board. The board meets once a month. Williamson is proud to be able to bring a dealer’s view to the debate, “sense-checking” initiatives from the retailers’ perspective. He has also been active with the dealer association for six years.
Average return on sales for the Mercedes network was 2% in 2010. Mercedes-Benz Retail Group was “well over that”, Williamson said.
“We should be above the average.
"Yes we’re in high cost cities, but they are the big cities with people who want to buy a Mercedes-Benz. Our opportunity is in line with the cost base so we should be able to perform better than other Mercedes dealers.”
“Our goal is to be the very best Mercedes-Benz dealer. Will we be best at every KPI? Probably not. But it’s really important that we aim to be there.”
It’s an ambition which reflects the brand claim adopted globally by Mercedes-Benz last summer: “The best or nothing”. It’s a motto of the carmaker’s founding father, Gottlieb Daimler.
“Our strategy starts with people. We’re not really a car business, what we are is a people business. There are about 2,000 in our group and we are nothing without them.
"That’s where I spend most time, coaching and driving people.
“Providing we have decent people we have a better chance of looking after our customers.”
The dealer group puts great store in employee satisfaction, benchmarking itself through surveys and the Sunday Times Best Companies to Work For accreditation – it ranked among the ‘Ones To Watch’ this year. It also received a National Training Award last year for a management development programme implemented in its north London market area.
The overall package for staff is above average – the group is happy to pay well for the best people.
Remuneration is linked to performance, such as in sales and CSI, and following a record year in 2010 every single employee received a £250 ‘share our success’ payment.
That is something Williamson is proud of, particularly on recalling the pain of recessionary 2008, when 200 jobs were cut.
“When times are tough we draw our horns in, but in a great year when our people are performing we reward them,” he added.
Naturally, customer satisfaction is extremely important and, like many in the industry, Williamson sees it as linked to employee satisfaction.
"The group is achieving its aim of remaining in the top 10 of Mercedes’ 32 UK market areas for CSI, and its Manchester dealership is top of all sites for sales and service CSI.
“We won’t always get it right. We’ll make the occasional mistake, but when we make one it’s important to show that we’ve fixed it.”
“Whenever something goes wrong it’s usually a small problem that can only get bigger so it’s important to get it resolved quickly.”
Service team managers are empowered to ensure that “what needs to be done gets done” and the customer is not inconvenienced. While Williamson’s focus is on group strategy, every dealership has its own dealer principal and accountant who take ownership of that business and are ever-present.
It enables the group to benefit from entrepreneurial spirit while still fitting in the corporate structure of Daimler. Staff are proud to wear the Mercedes-Benz Retail Group pin badge on their lapels.
Some customers aren’t aware of the group’s parentage, so this, plus its marketing, is an opportunity to demonstrate its direct link with the manufacturer.
This year the group expects growth. In fact, Williamson is aiming for another record-breaking year for his business.
After the cuts of the recession, Mercedes-Benz Retail Group is now in the best shape it has ever been and Williamson aims to use that strength to build.
Light commercial vehicle opportunities in Greater London top his list. Servicing of Mercedes’ vans is being added to the six sites serving the capital, through training existing staff and taking on more technicians to provide a 24-hour breakdown response which will get to stranded LCV customers within 30 minutes.
Four sites have also added Mercedes van sales operations, but the emphasis is on improving aftersales and customer service for London’s van users.
A used car centre was opened in east London at the start of the year, linked to its Stratford service centre, and this is forecast to sell 1,000 units annually.
The group considers London as a growth area. Manchester and Birmingham, its two other territories, will be solid, stable performers too.
Used cars are an important part of the business – in 2010 it sold 20,000 used cars and 15,000 new.
The importance is not just in volume and profitability, but also in protecting residual values for Mercedes and its customers by not under-selling stock.
Mercedes-Benz Retail Group has the biggest used car operation of all UK Mercedes dealers and it has to take “a responsible approach to the marketplace,” said Williamson.
The group expects its new car sales to improve by 10% this year, roughly in line with the manufacturer’s own UK ambitions.
“That looks do-able,” he said.
A heavily revised C-Class will help it compete with Audi and BMW in 2011, and the network is looking forward to 2012 when the new A-Class and B-Class will come through.
Both models are expected to compete much harder in their segments than the current models, which have failed to match their BMW and Audi rivals for volume.